Bureau of Labor Statistics

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Gasoline prices: cyclical trends and market developments

By Lori E. Hoglund

Gasoline prices experience volatility often credited to fluctuations in the crude oil market, but gasoline is subject to its own supply and demand pressures. Cyclical trends such as seasonal changes in refining costs, production adjustments, and changes in demand contribute to gasoline price movements over a typical year. Recently, however, market developments not influenced by seasonal fluctuations have affected prices. From 2010 to 2014, increased access to cost-advantaged domestic sources of crude oil has expanded domestic gasoline production, and evolving consumption patterns in the United States and abroad have altered both import and export demand.

Between January 2005 and September 2008, the producer price index for gasoline trended generally higher. (See chart 1.) The onset of the Great Recession pressured producer prices lower in the fourth quarter of 2008, a 67.8-percent drop, before prices started to rebound in early 2009. By mid-2011, prices reached prerecession levels and remained in a tight range before dropping more than 50 percent in the latter half of 2014 and early 2015. This Beyond the Numbers article examines the many factors that contributed to shifting producer gasoline prices from 2005 through 2014.

Chart 1
Producer Price Index for gasoline 2005–2014

View Chart Data

Producer Price Index for gasoline 2005–2014
Date Data Normalized

Jan-05

127.9 100

Feb-05

137.4 107.4276779

Mar-05

154.3 120.6411259

Apr-05

162.5 127.0523847

May-05

158.2 123.6903831

Jun-05

159.5 124.7068022

Jul-05

176.5 137.9984363

Aug-05

189.9 148.4753714

Sep-05

214.2 167.4745895

Oct-05

207.6 162.3143081

Nov-05

164.7 128.7724785

Dec-05

169.9 132.8381548

Jan-06

179.4 140.2658327

Feb-06

162.2 126.8178264

Mar-06

188.5 147.3807662

Apr-06

217.7 170.2111024

May-06

225.2 176.0750586

Jun-06

230.6 180.2971071

Jul-06

236.2 184.6755278

Aug-06

228.4 178.5770133

Sep-06

185.7 145.1915559

Oct-06

169.1 132.2126661

Nov-06

170.5 133.3072713

Dec-06

172.9 135.1837373

Jan-07

162.0 126.6614543

Feb-07

170.2 133.0727131

Mar-07

199.8 156.2157936

Apr-07

228.7 178.8115715

May-07

250.9 196.1688819

Jun-07

239.3 187.0992963

Jul-07

252.7 197.5762314

Aug-07

216.8 169.5074277

Sep-07

225.6 176.387803

Oct-07

223.4 174.6677091

Nov-07

258.4 202.0328382

Dec-07

235.4 184.0500391

Jan-08

240.0 187.6465989

Feb-08

243.7 190.539484

Mar-08

272.4 212.9788898

Apr-08

281.3 219.9374511

May-08

317.0 247.8498827

Jun-08

332.6 260.0469116

Jul-08

343.8 268.8037529

Aug-08

310.1 242.455043

Sep-08

316.1 247.146208

Oct-08

230.3 180.0625489

Nov-08

154.0 120.4065676

Dec-08

114.5 89.52306489

Jan-09

132.1 103.2838155

Feb-09

138.0 107.8967944

Mar-09

135.0 105.5512119

Apr-09

151.9 118.7646599

May-09

175.5 137.2165754

Jun-09

206.8 161.6888194

Jul-09

188.1 147.0680219

Aug-09

209.6 163.8780297

Sep-09

198.0 154.8084441

Oct-09

194.4 151.9937451

Nov-09

208.5 163.0179828

Dec-09

203.3 158.9523065

Jan-10

223.4 174.6677091

Feb-10

205.0 160.2814699

Mar-10

225.4 176.2314308

Apr-10

232.0 181.3917123

May-10

230.2 179.9843628

Jun-10

219.7 171.7748241

Jul-10

220.5 172.4003127

Aug-10

224.5 175.5277561

Sep-10

219.1 171.3057076

Oct-10

229.6 179.5152463

Nov-10

232.8 182.0172009

Dec-10

241.0 188.4284597

Jan-11

253.0 197.8107897

Feb-11

259.0 202.5019547

Mar-11

296.2 231.5871775

Apr-11

321.9 251.6810008

May-11

343.8 268.8037529

Jun-11

313.3 244.9569977

Jul-11

313.1 244.8006255

Aug-11

297.6 232.6817826

Sep-11

305.7 239.0148554

Oct-11

290.0 226.7396403

Nov-11

281.7 220.2501955

Dec-11

272.5 213.0570758

Jan-12

281.8 220.3283815

Feb-12

296.6 231.8999218

Mar-12

318.2 248.7881157

Apr-12

327.2 255.8248632

May-12

312.6 244.4096951

Jun-12

296.8 232.056294

Jul-12

288.6 225.6450352

Aug-12

312.0 243.9405786

Sep-12

332.1 259.6559812

Oct-12

318.7 249.1790461

Nov-12

281.5 220.0938233

Dec-12

271.1 211.9624707

Jan-13

275.1 215.089914

Feb-13

301.9 236.0437842

Mar-13

303.8 237.5293198

Apr-13

297.2 232.3690383

May-13

305.0 238.4675528

Jun-13

302.5 236.5129007

Jul-13

298.4 233.3072713

Aug-13

304.9 238.3893667

Sep-13

299.4 234.0891321

Oct-13

285.0 222.8303362

Nov-13

269.6 210.7896794

Dec-13

268.8 210.1641908

Jan-14

271.1 211.9624707

Feb-14

276.9 216.4972635

Mar-14

290.1 226.8178264

Apr-14

305.6 238.9366693

May-14

301.3 235.5746677

Jun-14

306.1 239.3275997

Jul-14

299.7 234.3236904

Aug-14

295.4 230.9616888

Sep-14

285.3 223.0648944

Oct-14

257.0 200.938233

Nov-14

231.2 180.7662236

Dec-14

195.0 152.4628616

 

Seasonality in gasoline refining

The Energy Information Administration (EIA) estimates the single largest influence behind changing gasoline prices is the crude oil market, which is subject to speculation, price shocks, supply disruptions, and general uncertainty. Consumer gasoline prices also can vary depending on the cost of refining, distribution, marketing, and federal and local taxes.1 Producer gasoline prices fluctuate because of changes in crude oil prices and refining costs, both of which are highly influenced by seasonal factors.2

Environmental Protection Agency (EPA) regulations require petroleum refiners to make different blends of gasoline for the summer and the winter. Summer-blend gasoline has a lower Reid Vapor Pressure (RVP), a measure of how easily petroleum liquids evaporate, which reduces evaporative emissions that contribute to smog. EPA mandates that gasoline with lower RVP arrive at retail stations before June 1st.3 The length of the gasoline supply chain means that producers must begin refining summer-blend gasoline in March and April to meet the June 1st retail deadline. Lower RVP gasoline is sold until September 15th, after which refiners switch to winter-blend gasoline. The principal difference between the summer and winter blends of gasoline is the amount of butane blended as an additive. Winter-blend gasoline contains 10 to 12 percent butane, whereas summer-blend gasoline contains about 2 percent. Butane is less expensive and more plentiful than gasoline, so the added butane in winter-blend gasoline both lowers refining costs and effectively increases gasoline supplies.4

For gasoline refiners, there is an inverse relationship between refining costs and the RVP specification.5 Costs rise as the RVP specification decreases, therefore summer-blend gasoline typically costs several cents more per gallon to produce than the winter blend. The average monthly percent changes in the producer price index for gasoline reflect the cost differences faced by refiners during the months of transition between the winter and summer blends.6 (See chart 2.)

Chart 2
PPI gasoline average monthly percent change, 2005–2014

View Chart Data

PPI gasoline average monthly percent change, 2005–2014
Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

2005

6.5 7.4 12.3 5.3 -2.6 0.8 10.7 7.6 12.8 -3.1 -20.7 3.2

2006

5.6 -9.6 16.2 15.5 3.4 2.4 2.4 -3.3 -18.7 -8.9 0.8 1.4

2007

-6.3 5.1 17.4 14.5 9.7 -4.6 5.6 -14.2 4.1 -1.0 15.7 -8.9

2008

2.0 1.5 11.8 3.3 12.7 4.9 3.4 -9.8 1.9 -27.1 -33.1 -25.6

2009

15.4 4.5 -2.2 12.5 15.5 17.8 -9.0 11.4 -5.5 -1.8 7.3 -2.5

2010

9.9 -8.2 10.0 2.9 -0.8 -4.6 0.4 1.8 -2.4 4.8 1.4 3.5

2011

5.0 2.4 14.4 8.7 6.8 -8.9 -0.1 -5.0 2.7 -5.1 -2.9 -3.3

2012

3.4 5.3 7.3 2.8 -4.5 -5.1 -2.8 8.1 6.4 -4.0 -11.7 -3.7

2013

1.5 9.7 0.6 -2.2 2.6 -0.8 -1.4 2.2 -1.8 -4.8 -5.4 -0.3

2014

0.9 2.1 4.8 5.3 -1.4 1.6 -2.1 -1.4 -3.4 -9.9 -10.0 -15.7

 

4.4 2.0 9.3 6.9 4.1 0.4 0.7 -0.3 -0.4 -6.1 -5.9 -5.2

 

Refineries must shut down production to prepare for seasonal blend changes. Seasonal maintenance usually happens late in the first quarter and early in the fourth quarter of the year—times of relatively weak gasoline demand. Chart 3 reflects the average drop in gasoline production ahead of the gasoline blend switchovers occurring in March and September, as well as production increases in the summer and autumn months. In addition, chart 3 shows that stock levels drop off during the summer “driving season,” when domestic demand is higher.7 Production shutdowns and the added refining costs associated with summer-blend gasoline contribute to higher producer prices in the early spring months.

Chart 3
Average monthly gasoline stocks and production, 2005–2014

View Chart Data

Average monthly gasoline stocks and production, 2005–2014
Month Gasoline production Gasoline stocks

Jan

8769.186047 223325.814

Feb

8800.902439 228307.5122

Mar

8721.545455 221276.3409

Apr

8833.325581 212074.1163

May

9090.818182 209903.75

Jun

9218.186047 211692.1395

Jul

9173.431818 213789.5227

Aug

9223.711111 207735.1111

Sep

8925.860465 205008.0233

Oct

8957.568182 204671.9318

Nov

9022.325581 204477.3721

Dec

9190.613636 212949.5227

Changing production patterns

Between 2009 and 2014, the gasoline industry changed significantly because of the “shale revolution.” Crude oil extracted from shale formations using hydraulic fracturing techniques has led to expanded domestic production. EIA data shows that U.S. crude oil production increased 72.5 percent between January 2010 and December 2014. Over the same period, gasoline production increased 12.2 percent.8 (See chart 4.) These increased supplies have contributed to the PPI for gasoline decreasing 12.7 percent between January 2010 and December 2014.

Chart 4
U.S. monthly gasoline and crude oil production 2010–2014

View Chart Data

U.S. monthly gasoline and crude oil production 2010–2014
Month Gasoline production U.S. crude oil production

Jan-2010

8673.4 167502

Feb-2010

8732.25 155353

Mar-2010

8944.75 170922

Apr-2010

9216.8 161851

May-2010

9091 167408

Jun-2010

9311 161450

Jul-2010

9450.6 164727

Aug-2010

9415.5 168773

Sep-2010

9212.25 168259

Oct-2010

8947.4 173590

Nov-2010

8920.25 167297

Dec-2010

9277.8 173728

Jan-2011

8808.5 170407

Feb-2011

9153.5 150988

Mar-2011

8873 173736

Apr-2011

8923 166640

May-2011

9174.75 174199

Jun-2011

9388.25 167472

Jul-2011

9201 165665

Aug-2011

9446 174437

Sep-2011

9232 167700

Oct-2011

9061.25 182136

Nov-2011

9152 180184

Dec-2011

9279.8 186834

Jan-2012

8657 190729

Feb-2012

8809.75 181592

Mar-2012

8780.2 195215

Apr-2012

8850.5 188892

May-2012

9070.75 196592

Jun-2012

9259.4 187566

Jul-2012

9113.25 198114

Aug-2012

9277.4 195858

Sep-2012

9026.5 197224

Oct-2012

8969 215177

Nov-2012

9022 211334

Dec-2012

9064.5 219512

Jan-2013

8736.75 220166

Feb-2013

8951 199542

Mar-2013

8785 222853

Apr-2013

8861 221394

May-2013

9033.2 226561

Jun-2013

9204.5 217821

Jul-2013

9337.5 231312

Aug-2013

9305.6 232743

Sep-2013

9079 231930

Oct-2013

9287 238786

Nov-2013

9090.2 236927

Dec-2013

9271.5 244149

Jan-2014

8780.6 248112

Feb-2014

8843 227221

Mar-2014

9157.75 255251

Apr-2014

8955.75 256281

May-2014

9438.4 266990

Jun-2014

9296.25 260055

Jul-2014

9314.5 269927

Aug-2014

9503 272758

Sep-2014

9079.75 267388

Oct-2014

9242.8 282126

Nov-2014

9552.25 273190

Dec-2014

9734 288934

In addition, refiners have increased their capacity to process crude oil. EIA annual data show refining capacity increased 1.6 percent from 2010 to 2014, mainly because of better refining capabilities.9 Refinery utilization rates increased 17.9 percent from January 2010 to December 2014.10

Shifting imports and exports

In 1975, Congress enacted the Energy Policy and Conservation Act, which placed a ban on exporting crude oil. This export ban remains in place (with some limited exceptions) to protect the domestic supply, insulate the United States from global price shocks, and keep gas prices low.11 Domestic crude oil is often held in storage in the United States, or it is refined into petroleum products and sold domestically or exported. Because much of the crude oil extracted from shale formations is ideal for gasoline refining (“light, sweet” oil), exports of gasoline have increased with the boom of domestic oil production. Gasoline exports have more than quadrupled between January 2010 and December 2014, while imports of finished gasoline fell more than 90 percent.12 (See chart 5.) The United States has been a net exporter of gasoline every month since September 2009. Exports to Latin America, Africa, and Asia continue to climb as demand increases, while imports have consistently decreased.13

Chart 5
U.S. monthly imports and exports of finished motor gasoline, 2005–2014

View Chart Data

U.S. monthly imports and exports of finished motor gasoline, 2005–2014
Month and year U.S. Exports of Finished Motor Gasoline U.S. Finished Motor Gasoline Imports

Jan-2005

4538 15815

Feb-2005

3848 16738

Mar-2005

4413 17308

Apr-2005

3406 19252

May-2005

5517 19153

Jun-2005

4412 17865

Jul-2005

4595 18059

Aug-2005

4865 15853

Sep-2005

2860 19327

Oct-2005

2485 26856

Nov-2005

2875 17508

Dec-2005

5657 16237

Jan-2006

3117 18799

Feb-2006

3407 17666

Mar-2006

5147 17169

Apr-2006

3802 15303

May-2006

5268 15845

Jun-2006

4486 12203

Jul-2006

5150 13617

Aug-2006

2817 17353

Sep-2006

4114 11265

Oct-2006

4746 12546

Nov-2006

4873 11634

Dec-2006

4838 10048

Jan-2007

3484 12659

Feb-2007

5369 10420

Mar-2007

5367 11192

Apr-2007

3479 14944

May-2007

3122 18018

Jun-2007

2624 13220

Jul-2007

2759 13447

Aug-2007

3321 12522

Sep-2007

2432 14351

Oct-2007

3443 9887

Nov-2007

4562 9080

Dec-2007

6406 10877

Jan-2008

4095 11803

Feb-2008

5700 10273

Mar-2008

5691 11600

Apr-2008

6048 11575

May-2008

5687 11868

Jun-2008

6239 13842

Jul-2008

7302 10013

Aug-2008

4007 6363

Sep-2008

3490 7579

Oct-2008

4365 7417

Nov-2008

3929 3453

Dec-2008

6287 4596

Jan-2009

4920 7308

Feb-2009

5106 7369

Mar-2009

4453 8491

Apr-2009

3948 6815

May-2009

6563 7561

Jun-2009

6155 6541

Jul-2009

7616 7118

Aug-2009

5041 9427

Sep-2009

5542 4249

Oct-2009

6735 4985

Nov-2009

5711 4477

Dec-2009

9536 7195

Jan-2010

6841 5547

Feb-2010

7053 5495

Mar-2010

11271 3735

Apr-2010

9238 5351

May-2010

5714 3318

Jun-2010

8517 4897

Jul-2010

8765 3547

Aug-2010

6593 3999

Sep-2010

6781 3891

Oct-2010

8769 2653

Nov-2010

12398 3520

Dec-2010

16022 3056

Jan-2011

12833 3159

Feb-2011

11379 3336

Mar-2011

13504 4187

Apr-2011

14365 4150

May-2011

13869 4246

Jun-2011

11841 3905

Jul-2011

10411 2865

Aug-2011

16617 3293

Sep-2011

15866 2976

Oct-2011

16217 2038

Nov-2011

18772 2210

Dec-2011

19103 1872

Jan-2012

11300 2488

Feb-2012

10595 1335

Mar-2012

13761 2452

Apr-2012

11294 989

May-2012

9744 1319

Jun-2012

10286 1108

Jul-2012

11835 983

Aug-2012

11788 1050

Sep-2012

11914 680

Oct-2012

14318 807

Nov-2012

14524 955

Dec-2012

18299 1981

Jan-2013

13242 1235

Feb-2013

13678 527

Mar-2013

9782 1730

Apr-2013

7860 1056

May-2013

7746 1188

Jun-2013

8661 2094

Jul-2013

10185 1635

Aug-2013

11695 2095

Sep-2013

9604 1205

Oct-2013

11884 1175

Nov-2013

13115 1470

Dec-2013

18695 1030

Jan-2014

16402 1314

Feb-2014

11181 315

Mar-2014

11972 1122

Apr-2014

11241 1722

May-2014

15109 1454

Jun-2014

10869 1525

Jul-2014

13872 1859

Aug-2014

13084 2252

Sep-2014

10365 2316

Oct-2014

11245 1983

Nov-2014

14895 1226

Dec-2014

21059 898

Conclusion

The expansion of crude oil production associated with the “shale revolution” has changed the U.S. market for refined petroleum products, affecting the behavior of domestic gasoline prices beyond usual seasonal price movements. Recurring trends, such as production shutdowns and shifting refining costs related to blending protocols, will likely continue to influence seasonal gasoline price movements. However, the transition of the United States from crude oil importer to self-sufficient producer and net gasoline exporter are enormous shifts largely unforeseen a decade ago. The future impact on gasoline production, imports, exports, and, more importantly, prices has yet to be fully realized.

This Beyond the Numbers article was prepared by Lori E. Hoglund, Economist, Division of Producer Prices and Price Indexes, Office of Prices and Living Conditions, U.S. Bureau of Labor Statistics. Email:  Hoglund.Lori@bls.gov, telephone: (202) 691-7024.

Notes

1 What We Pay for a Gallon of Gasoline, U.S. Energy Information Administration (U.S. Department of Energy, April 17, 2015), www.eia.gov/petroleum/gasdiesel/.

2 U.S. Regular Gasoline Prices, U.S. Energy Information Administration (U.S. Department of Energy, April 17, 2015), www.eia.gov/petroleum/gasdiesel/.

3 Volatility / Reid Vapor Pressure (RVP), (U.S. Environmental Protection Agency, April 17, 2015), http://www.epa.gov/oms/fuels/gasolinefuels/volatility/index.htm.

4 A Primer and Gasoline Blending, (Energy Policy Research Foundation Inc., June 30, 2009), http://eprinc.org/2009/06/a-primer-on-gasoline-blending/.

5 Gasoline Specification Changes and Price Effects, U.S. Energy Information Administration (U.S. Department of Energy, March 25, 2015), http://www.eia.gov/petroleum/weekly/archive/2015/150325/includes/analysis_print.cfm.

6 All PPI data are recalculated 4 months after original publication, to reflect late data received from survey respondents. Data for December 2014 were revised with the release of PPI data on May 14, 2015.

7 Weekly Petroleum Status Report, Table 4, Stocks of Crude Oil by PAD District, and Stocks of Petroleum Products, U.S. Products, U.S. Energy Information Administration (U.S. Department of Energy, April 17, 2015), http://www.eia.gov/petroleum/supply/weekly/.

8 U.S. Field Production of Crude Oil, Monthly, U.S. Energy Information Administration (U.S. Department of Energy, April 17, 2015), http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=MCRFPUS1&f=M.

9 U.S. Refinery Utilization and Capacity, Annual, U.S. Energy Administration (U.S. Department of Energy, April 17, 2015), http://www.eia.gov/dnav/pet/pet_pnp_unc_dcu_nus_a.htm.

10 U.S. Refinery Utilization and Capacity, Monthly, U.S. Energy Administration (U.S. Department of Energy, April 17, 2015), http://www.eia.gov/dnav/pet/pet_pnp_unc_dcu_nus_m.htm.

11 Brad Plumer, “U.S. oil exports have been banned for 40 Years. Is it time for that to change?” The Washington Post, January 8, 2014, http://www.washingtonpost.com/blogs/wonkblog/wp/2014/01/08/u-s-oil-exports-have-been-banned-for-40-years-is-it-time-for-that-to-change/.  Also, see Energy Policy and Conservation Act, Pub. L. Nos. 94-163 and 113-67, Section 103 (January 15, 2014), http://legcounsel.house.gov/Comps/EPCA.pdf.

12 U.S. Exports of Finished Motor Gasoline, Monthly, U.S. Energy Information Administration (U.S. Department of Energy, April 17, 2015), http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=MGFEXUS1&f=M.

13 U.S. Imports by Country of Origin, Finished Motor Gasoline, U.S Energy Information Administration (U.S. Department of Energy, April 17, 2015), http://www.eia.gov/dnav/pet/pet_move_impcus_a2_nus_epm0f_im0_mbbl_m.htm.

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Publish Date: Monday, May 18, 2015

Suggested citation:

Lori E. Hoglund,   “Gasoline prices: cyclical trends and market developments,” Beyond the Numbers, vol. 4, no. 8 (U.S. Bureau of Labor Statistics, May 2015), https://www.bls.gov/opub/btn/volume-4/gasoline-prices-cyclical-trends-market-developments.htm (visited July 26, 2021).

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