That summer camping trip just got a little bit cheaper. The average price of a gallon of regular gas has dropped seven cents in the past week, from around $3.56 to $3.49. A month ago a gallon of regular gasoline cost about $3.61.
The average cost of a gallon of gasoline is still significantly higher than it was a year ago, when the price was $3.33. And today's price is still higher than the January 1st price of $3.42 a gallon.
Since the crude oil price spike in February, the cost of Brent crude has dropped and remained lower, while the cost of West Texas Intermediate (WTI) crude also dropped but has risen back to January levels. The differential, or spread, between the two prices has narrowed from nearly $20 a barrel to less than $8 a barrel.
What has happened is that WTI prices have risen as imports of Brent have declined. This is good for the producers and refiners, but not so good for U.S. consumers. Because crude oil from North Dakota's Bakken play can now get to both the East and West coasts by rail, prices are higher for Bakken crude while still lower than the price of Brent. Yet refiners are able to price gasoline as if the feedstock were Brent, giving them a very nice profit indeed.
So, while July 4th gasoline looks to be a little cheaper than it has been, a larger drop is still in the cards for later this summer. By Labor Day, that last camping trip of the summer should be cheaper still.
Filed under: Commodities & Metals