Falling gasoline prices in the US

Falling gasoline prices in the US

The influence of crude oil prices and other factors

On a national level, the main reason cited for movements in gasoline prices is often changing crude oil prices. Crude oil acquisition is the main cost in producing gasoline, and changes in crude oil prices, along with changes in gasoline market conditions, drive changes in spot and retail gasoline prices. EIA estimates that at current prices, about 55% of the retail price of gasoline is attributable to the cost of crude oil. However, at the regional level, several factors other than falling crude prices are influencing regional wholesale gasoline spot prices and retail gasoline prices.

Recent EIA analysis has shown that Brent crude oil prices have more influence on U.S. spot gasoline prices than do changes in West Texas Intermediate (WTI) crude oil prices. The price of Brent crude oil has fallen by 57.8%, near its lowest price level in six years, since reaching $115 per barrel on June 19, 2014. U.S. gasoline prices have declined as well, with spot gasoline prices in New York Harbor falling 54.7%

Other factors being equal, a $1-per-barrel change in the price of crude oil is completely passed through to the spot price of gasoline as a 2.4-cent-per-gallon change. EIA research and analysis has also shown that changes in spot gasoline prices have a consistent and predictable effect on changes in retail gasoline prices.

See the full report at: http://www.eia.gov/petroleum/weekly/

Oil and Gas Press