OK, gas prices have jumped again and impacted inflation. The last reports show energy prices jumped 1.1% in March after jumping 2.3% in February.
Gasoline trades on the commodity exchanges under the symbol RBOB while the US benchmark crude oil trades as WTI.
In February, 2024, WTI — what gasoline is made from — was trading between $72 and $79 per barrel ($1.71 to $1.88 per gallon equivalent) and in March, 2024, WTI traded between $78 and $83.50 per barrel ($1.86 to $1.99). RBOB — the gasoline that was made — was trading between $2.15 and $2.61 per gallon in February, 2024 and between $2.52 and $2.76 for March. Statistia (www.statista.com/...) lists the average price for all grades of gasoline in the US in February, 2024 at $3.33 per gallon while March, 2024 was $3.54.
So, February, 2024 showed the spread to be:
$1.80 per gallon for input — $2.38 per gallon for output — $3.33 per gallon to buy or $0.58 per gallon for refiner margin and $0.95 per gallon for retail margin
March, 2024 spreads were:
$1.92 per gallon for input — $2.64 per gallon for output — $3.54 per gallon to buy or $0.72 per gallon for refiner margin and $0.90 per gallon for retail margin
By comparison, in March, 2008, WTI traded between $101 and $143 per barrel ($2.40 to $3.40 per gallon) while RBOB traded between $2.67 and 3.58 per gallon and EIA statistics for retail gasoline prices for March, 2008 were $3.30.
This gives March, 2008 spreads as:
$2.90 per gallon for input — $3.17 per gallon for output — $3.30 per gallon to buy or $0.27 per gallon for refiner margin and $0.13 per gallon for retail margin
Um, anyone see where the inflation in energy prices have come from? It isn’t the costs, it’s the margin. Just between February and March, the oil industry has increased the margin on gasoline sales from $1.53 per gallon to $1.62 per gallon or 5.8%. No wonder we keep getting 3.5%+ inflation.
And the increase in margin between 2008 and 2024 was over 400%.
BTW, diesel prices are also included in the CPI number. They dropped by almost $0.20 per gallon in the same February — March time period this year. That is why fuel prices are only up 1.8%.