Reported in The Hill’s E2 Wire: “Senate to hold hearing on surge in gas prices.”
Senate Energy and Natural Resources Committee Chairman Ron Wyden (D-Ore.) will soon convene a hearing on soaring gasoline prices that he contends have “no reasonable explanation.”
Average nationwide gasoline prices have risen by nearly a half-dollar per gallon since the beginning of the year.
“I think you ask the question, ‘what is going on to make the prices go up so dramatically now?’ The custom has always been — one we didn’t enjoy in America but it has been sort of a tradition — [that] prices go up in the spring. We are still in the winter,” Wyden said Friday.
Let me explain the issue, clear up the confusion, and save the Senate and a handful of expensive lobbyist the trouble of having a hearing.
Since the middle of December, the world price of oil (Brent benchmark) jumped up to about $117 bbl. On average over the last 20 years, gasoline prices equal approximately 70 cents plus the price of crude oil times 0.027. With a priced of crude oil of $117, we should expect a gasoline price of about $3.859.
According to U.S. EIA data, the current national average price for “Gasoline–All Grades” is $3.851. (See the Febrary 25, 2103 data in this EIA price series.) The current gasoline “price surge” is giving us a price which is typical given current world crude oil prices.