Wednesday, February 24, 2016

Gas prices look like they have finally (seasonally) bottomed

 - by New Deal democrat

Gasoline refiners are in the process of switching over to their summer blend, which means that gas prices at the pump should rise.  And, as this graph from Gas Buddy shows, it looks like in the last week or so gas prices may have made their winter bottom:

Here's the longer view:

Given that seasonality, a YoY comparison is helpful establishing the trend:

It had looked like the trend was bottoming back in December (when the YoY comparisons were less than 10%), before Oil went below $27/barrel in January and there was a renewed pulse downward.  So no forecast there!

By the way, if you want a real good handle on how cheap gas actually is, here are nominal gas prices (blue) compared with nominal average hourly earnings (red) for the last 25 years, both normed to 100 as of January 2016:

Laborers have to work less time to pay for a gallon of gas than at any time in the last 25 years except for 1998-99 and briefly at the end of 2001 and early 2002.  For there to be a new "real" record low would require gas prices to fall to about $1.25 a gallon.