Friday, November 09, 2007

US gasoline prices have hit a wall

I found the news that oil refiners' margins have been squeezed by the high crude oil prices to be quite remarkable; typically I think it has been safe to assume that crude price increases were immediately passed on to the gas pump. As Calculated Risk points out, the implication is that domestic gasoline demand is weak. Another way to say it is that gasoline has reached a price point where US users either limit their use or find a substitute. I don't have hard data at my fingertips, but I believe that businesses have been a strong driver of finding ways to limit or reduce gasoline consumption. It is interesting to know that gasoline prices can't just spiral to the stratosphere. Here is a chart of US gasoline prices posted 11-7-2007 by the US Energy Information Administration:

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