Monday, March 31, 2014

Pain and Gain at Your Gas Pump

Are you paying too much at the gas pump? Are you sure?

On Saturday, I posted four energy charts, three of which had to do with crude oil. Here are two more energy charts, from Bespoke Group, having to do with the price of gasoline ...

Yes, gasoline prices are going up ...

In fact gasoline prices are up 12% since November. However, gasoline prices ALWAYS rise this time of year. Going back to 2005, the average price of a gallon of gas has risen in the first quarter every year for an average gain of 15.4%, according to Bespoke's analysis.

Bespoke doesn't explain that it's what happens when the refineries make the switch from the winter to summer blend of gasoline. So, there's no voodoo involved.

As refineries switch to cleaner summer blends, inventories go down and prices go up. Gasoline inventories decreased by 5.1 million barrels to 217.2 million barrels in the most recent count. At 217.2 million barrels, inventories are down 4.0 million barrels, or 1.8% lower than one year ago. 

The interesting thing is comparing the daily change in the average price of a gallon of gas so far this year to the 'typical' annual pattern going back to 2005. 

In other words, you're feeling pain, but not as much as usual. And that's a gain for consumers.

So why did consumer sentiment fall in March? The Thomson Reuters/University of Michigan's final March reading on the overall index on consumer sentiment came in at 80, down from 81.6 the month before, and below consensus estimates.

And this is despite the fact that consumers are spending more money.

Bonddad, writing at, reports on Consumer spending
ICSC -1.5% w/w.  +1.7% YoY

Johnson Redbook +3.1% YoY

Steel production is up. Railroad transport is humming along. Money supply is increasing. So why are consumers feeling so down?

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