Wednesday, August 24, 2011

This Is Why Gasoline Prices Have Not Been Falling With Oil

he pump falling too. As shown in the chart below, the price of WTI crude oil has dropped nearly 8% year to date after being up more than 30% earlier this year. RBOB Gasoline, however, was up by similar amounts earlier this year, and it is still up 14% YTD. So what gives?

If you are hoping for a drop in the price of gasoline comparable in size to the drop in the price of WTI crude oil, you may be waiting awhile. If we compare the price of RBOB gasoline to the price of Brent Crude, which is the benchmark price for Europe, we see that the two have traded in tandem with each other for the entire year. So unless we begin to see a drop in the price of Brent crude, don't expect to see much relief at the pump any time soon.

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