Just last week, we shared the results from a report that showed Chicago has the most expensive gasoline in the country. No one knows for certain how much higher gasoline prices will move from here, but the price trend within the U.S. Gasoline Fund (UGA – an exchange traded fund that tracks the price of gasoline within the futures market) can not be encouraging for those of us hoping for a respite from the escalating prices.
The fact is that, between January 17 and February 20, the price of gasoline at the pump rose every single trading day while the UGA ETF rose to its highest level since 2008. According to a new government report released on February 21: “Drivers in the U.S. should expect to see a modest further increase in gasoline prices at the pump as the refinery outages cut supply and plants begin making more expensive summer grade fuel.” This refinery transition from winter blend to summer is coming a bit earlier than in prior years.
The report came from the Energy Information Administration (the U.S. Energy Department’s statistical arm) in its “This Week in Petroleum Report”. According the EIA: “Despite the significant rise in retail gasoline prices since the start of the year, a part of the even steeper rise in wholesale prices has not been fully reflected in pump prices.”
At the national level, retail gasoline prices have climbed 45 cents a gallon since the beginning of 2013, with the U.S. average price per gallon sitting at $3.78 on February 22 (a fourteen cent jump from the prior week, according to the most recent “AAA” survey).
A price chart of the UGA ETF can be found in the accompanying graph. Major consumers of gasoline hedge their expenses by trading within the futures market and/or utilizing UGA to smooth out the volatility within gas prices. Time will tell where the move settles from here. However, one thing is always certain with gas prices – they will keep changing regularly!