Exclusive Fuel-Price Analysis: Earliest Spring Peak Ever

What's shortening the winter-to-spring gasoline-price rally?

Walter Zimmermann, United ICAP

Spring gas-price peak creep

The trend since 2009 has been unmistakable: An earlier and earlier end to the winter-to-spring rally in gasoline futures.

NEW YORK -- It's well known that gasoline prices rise during the seasonal change from winter to spring. But in 40 years of watching seasonal trends in a variety of energy sectors, I've never seen anything like the current trend of earlier and earlier peaks in any other seasonal trend in energy.

Something is definitely going on here. I have been carefully tracking seasonal trends in distillate, gasoline, WTI, Brent, GasOil and natural gas since the early 1980s, and this tendancy toward earlier and earlier peaks has never happened before. What might be causing this dramatic shrinkage in both the duration and extent of the gasoline winter to spring rally?

One argument might be that, if everyone knows gasoline prices will rally from Q4 of one year to Q2 of the next, then that seasonal rally should get shorter and shorter. However if this is the theory we're going on, then all the seasonal trends would be shrinking. And that is simply not happening.

Perhaps this is another level of fallout from the cheap shale crude that continues to flood U.S. refiners. Places like the Bakken and Eagle Ford have made U.S. refiners the lowest-cost producers in this hemisphere. They are making lots of money exporting lots of product to Latin America. They will not be cutting runs anytime soon. So why get anxious about gasoline prices running away from us? Why chase the Q4 to Q2 rally? There will be more than enough gasoline to go around. Especially if the market share of hybrid and electric vehicles continues to grow.

Pre-Season Rally Duration (Calendar Days)

% Gain in Spot Futures (Gain in Value)

2008 to 2009 175 168%
2009 to 2010 144 35%
2010 to 2011 158 66%
2011 to 2012 126 41%
2012 to 2013 127 28%
2013 to 2014 116 22%