US gasoline prices have been rising steadily since January, and are now over $2.85 a gallon on average, James D. Hamilton points out at Econbrowser, in a post that also highlights plenty of other useful data on the cost of motoring in the US.

He also provides an elegant explanation of what is going on: the increase is a result of the usual seasonal effect - prices rise as the summer driving season approaches - plus crude oil going from about $50 a barrel to over $67 for Brent today.

Another factor is the tightness of US refining capacity, which has sent refiners’ margins soaring. Lucas Herrmann of Deutche Bank, in the note on BP referred to in an earlier post, lamented the company’s failure to "take advantage of the current exceptional environment for US refiners".

UPDATE: The EIA figures for gasoline stocks show a continued decline, suggesting the upward trend is not going to reverse any time soon. The analysis gives some further reasons why gasoline prices are strong, and apears to have given up on last week’s suggestion that "it wouldn’t be too surprising to see prices began to stabilize or decline over the next several weeks."

April 25th, 2007 in Gasoline | Permalink