With oil in the midst of what could be its sharpest downturn in history, it’s not a surprise to see that gas prices at the pump have also been declining.  Looking at the chart below, the national average price of gasoline has had a close correlation to the price of crude oil, but looking a little closer, prices at the pump haven’t dropped nearly as much as the price of crude oil.  For example, while crude oil prices are at their lowest levels since the 1990s, the national average price of a gallon of gas is still above where it was at the lows in 2016.

Another way to illustrate this is by comparing the performance of crude oil vs average prices at the pump over the last 50-trading days.  During that span, front-month WTI prices are down 78% while average prices at the pump are down less than a third of that at 25.6%.  With a spread of over 50 percentage points, the performance gap between the two has never been wider.

While gas prices are understandably lower so far this year, these declines have come at a time when prices have consistently risen.  Going back to 2005, this is the first year that average gasoline prices have been below $2 per gallon at this time of year.  Not only that but it also the first time that prices have been down on a YTD basis through 4/20 as well.  Normally, prices at the pump are up over 15% YTD at this time of year, but due to the global pandemic, prices this year are down almost 30%. Now, if only consumers had anywhere to go and take advantage of these abnormally low prices!  Start a two-week free trial to Bespoke Institutional to access our full range of research and interactive tools.

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