Monday, December 27, 2010

Chart of the Week: U.S. Retail Gasoline Prices

As more and more data points begin to suggest that the green shoots of months past are finally showing signs of developing, concerns about supply and demand in the energy space are starting to heat up again.

In the past week, the average retail price of gasoline in the United States shot up to $2.98 per gallon (and $3.29 per gallon in my home town of San Francisco, but who’s counting?) to a post-crisis high.

This week’s chart of the week shows 21 years of retail gasoline prices in the U.S. (blue line) plotted against a backdrop of the S&P 500 index (gray area chart.) Note that gasoline prices peaked in July 2008 at $4.11 per gallon and fell all the way to $1.61 per gallon by the end of the year, less than six months later.

Not surprisingly, gasoline prices peaked after stocks did and followed stocks down during the financial panic. Interestingly, gasoline actually bottomed about 2 ½ months before stocks and the two have been tracing a very similar pattern back up toward previous highs during the course of the past two years.

Going forward, continued increases in gasoline prices should begin to put pressure on consumer spending and slow down economic growth and the rebound in stocks. Whether this phenomenon begins to show up just on the other side of $3.00 per gallon or at much higher levels remains to be seen, but it is an important factor in the ability of consumers to repair their balance sheet, increase their spending, and power the 70% of the GDP that relies on consumer spending to drive growth.

Related posts:


[source: Energy Information Administration]

Disclosure(s): none

blog comments powered by Disqus
DISCLAIMER: "VIX®" is a trademark of Chicago Board Options Exchange, Incorporated. Chicago Board Options Exchange, Incorporated is not affiliated with this website or this website's owner's or operators. CBOE assumes no responsibility for the accuracy or completeness or any other aspect of any content posted on this website by its operator or any third party. All content on this site is provided for informational and entertainment purposes only and is not intended as advice to buy or sell any securities. Stocks are difficult to trade; options are even harder. When it comes to VIX derivatives, don't fall into the trap of thinking that just because you can ride a horse, you can ride an alligator. Please do your own homework and accept full responsibility for any investment decisions you make. No content on this site can be used for commercial purposes without the prior written permission of the author. Copyright © 2007-2013 Bill Luby. All rights reserved.
 
Web Analytics