Open Thread — Gas Prices
When oil went into freefall, dropping from $147/bbl last year into the $40/bbl range, I wasn’t surprised to see gas make an enormous downward trend, and (as usual) trail the oil price by 1-2 weeks.
But since then, I’ve seen little appreciable movement in the oil price, but gas has been trending back upwards (at least here in south Orange County, CA). At the trough, gas was about $1.79/gallon locally, and it’s moved up to about $2.23/gallon. These are same-store prices, for a station I pass every day to/from work. Other stations have seemed to follow a similar trend.
So, for that, I have two questions:
1. Is this gas behavior common nationwide? I know there are a lot of reasons why the California gas market are screwed up, so if other areas of the country aren’t seeing this, I won’t be overly surprised.
2. Why is this occurring? What are the market forces driving the gasoline upward in price while the oil price has remained low?
There are a lot of potential thoughts — overshoot on the downtrend, increased demand, etc. But with oil stagnant, I don’t see (and haven’t adequately studied) the change, so I’m relying on The Liberty Paper’s readership to offer your thoughts.