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Gas Prices Hit 2-Month Highs, Rise At Fastest In a Decade

Despite still low crude oil prices, gas prices at the pump have been on the rise recently. While still at levels not seen since 2009, gas prices in February have surged at the fastest pace in at least a decade to 2-month highs. As SMRA notes, shutdowns at some refineries due to strikes has been a good part of the reason for the gain in recent weeks, but prices for gasoline also typically start to rise with the approach of spring as refineries prepare to change over to less polluting formations for the summer months. We assume, in some incredible way, higher gas prices are also a positive for the US economy (just as lower gas prices were... not).

 

This is the biggest surge in prices (around 14%) in February for at least a decade...

Notice also above the seasonality of gas prices.

Of course - levels remain notably 'low' relative to the last few years...

 

SMRA provides some further color...

In spite of still low prices for crude oil, the cost of gasoline prices has reversed in the past four weeks, ending a generally downward trend that began in early July and extended through January. From a near-term peak of $3.704 per gallon for regular gasoline in the June 30 week in the EIA data, the price plunged over $1.60 to $2.044 in the January 26 week. The price has now retraced 28.8 cents of that to $2.332 in the February 23 week.

 

Still, even at current levels, consumers have not seen prices like this since the summer of 2009 in the depths of the recession when low demand for oil helped reduce costs for gasoline.

 

Shutdowns at some refineries due to strikes has been a good part of the reason for the gain in recent weeks, but prices for gasoline also typically start to rise with the approach of spring as refineries prepare to change over to less polluting formations for the summer months.

 

Consumers may be a little disappointed at losing a bit of the discretionary income freed up by the substantial decline in gas prices, but on the whole the pinch should be small. Fro now, prices more affordable than any time since 2010.

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