CAMARILLO, Calif. -- Regular grade gasoline prices jumped 10.97 cents on average at retail in the past two weeks, to $2.3504 gal. This was after five weeks of decline, of about 9 cents. During these same two weeks, crude oil prices fellthe equivalent of 7 cents per gallon (nearly $3 per barrel), said the most recent Lundberg Survey of approximately 7,000 U.S. gas stations.
Gasoline does not care what the crude oil price does right now, unless crude should move dramatically up or down. This is [image-nocss] because of the two new EPA regulations (lower sulfur, gasoline and diesel) and the two energy bill events (mandated ethanol use, and via no legal protection for use of methyl tertiary butyl ether [MTBE], the dropping of that lower-cost additive). The four changes to fuel recipes will work symbiotically on both transportation fuels and in fact put overall refining costs higher than they have ever been in history.
This 11-cent hike at retail also reflects our seasonally building gasoline demand, pulling on supply, and which combined with the new recipe requirements, makes cost hikes exponential with rising seasonal temperatures. So the more gasoline we need, the more it will cost. The new rules add punch to the effect that demand seasonality has upon price.
Unless crude crashes, further retail gasoline price increases are virtually mandated.
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