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  Are Gas Prices Too High?
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Lately, we have been getting frequent questions about why gas prices seem to have risen more than crude oil prices.  Some people believe that refiners are taking advantage of the marketplace and pushing gas prices past the normal spread.  But, the data says this is not the case.

The chart above divides the wholesale price of unleaded gasoline by the front month light sweet oil futures price.  Wholesale prices help avoid any wider spread caused by higher sales taxes imposed by states or municipalities. 

Clearly, we could make any case we want from this data.  If we start in early 2004, then the price of gasoline is "low" today relative to the past.  But, if we start in early 2008, when oil prices were spiking to all-time highs, the price of gas looks "high."  In the end, the appropriate thing to do is look at the 10-year average.  The bottom-line:  Current gas prices relative to oil prices, at least through April, were well within the norm of the past decade. 
Posted on Monday, May 16, 2011 @ 3:00 PM • Post Link Share: 
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