Gas Breaks Record, Breaks From Pattern

Gas prices have risen a lot over the last three years, and there's been a lot of fluctuation. I've carefully followed the prices of both gasoline and crude oil since Katrina damages sent crude oil to a record $70 and local gasoline to a record $3.09 a gallon.

There have plenty of gas price spikes since then, and many like to accuse the big oil companies of deciding to gouge prices because they can. However, I knew there was more than that, because gas prices would typically spike whenever the price of crude oil jumped, and trickle down when it had some catching up to do. After two years, I became familiar with the relative prices (for a while, $70 meant $3 a gallon; $65 meant $2.50, and $60 meant $2) and I could guess with decent accuracy what days the price of gas would go up.



This custom graph from stlouisgasprices.com shows that in the last three years overall gas prices and crude oil have risen and fallen together, suggesting that the big oil companies aren't randomly raising prices because they can. The two red spikes in the middle are post-Katrina and post-Rita, after which crude oil dropped back to "normal" and gas prices trickled down to under $2 through the end of 2005.

Suddenly, last month, that pattern was broken. Gas jumped several times without a justified spike in crude oil. Notice the very end of the above graph, where blue drops and red rises. If we zoom in to the last six months, there is a clear and sudden disparity:



Since the beginning of April, I have not been able to predict what gas prices will do. At the end of this week, St. Louis prices shot up to a record $3.19, while crude oil dropped to $62. Last summer, crude oil in the record $70's kept us under $3 for gas.

Before, conspiracy theorists claimed that big oil companies jacked up the price just to make more money, but the data showed a different cause. But now, I don't know. For the last month the past patterns led to the prediction that gas would slowly trickle down until it had caught up with crude oil. Instead, gas has continued to spike, reaching new records.

Reading several articles across the 'net gives some insight. "Reduced output due to refinery problems" seems to mean that the crude oil bought is not being refined into gas as quickly as it usually is. If gasoline supplies have been declining for twelve consecutive weeks, a decreasing supply coupled with increasing demand (of US gas short-term, not world oil long-term) this would anticipate a rise in gas prices that was unrelated to the price of crude oil.

I still don't like that it's broken years of its pattern, though. I don't like it.