What’s the “future” for price at the pump?

Lately, futures prices for crude oil and refined products such as gasoline and heating oil have been in a free-fall.  For example, the January 2015 futures contract for “RBOB Gasoline” is trading at the equivalent of around $1.64 per gallon.  As shown in the following graph, this represents a price drop of roughly 85-90 cents per gallon since September:

RBOB Gasoline

AAA reports that today’s national average is $2.639 and could fall to $2.50 within the next couple of weeks.  Nationally, the average markup from the near term futures contract price to prices at the pump has averaged 62 cents per gallon since January 2000 (which is when AAA began tracking this information).  Therefore, if futures prices hold at (or fall further from) current levels it seems quite likely that the price at the pump may be headed even lower.

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One thought on “What’s the “future” for price at the pump?”

  1. The big question is what is the well head price for Saudi oil versus shale. My bet is on the Saudis for several more years until the EPA issues with shale oil are resolved. Shale remains significantly higher in well head price but blended with a bushel basket of sweet crude (ANGOLA) shale oil may be able to safeguard out national interests, providing French Canadians don’t claim right to the upper New England states,

    The feel good factor is less dependence on crude from unstable areas of the Middle East and more purchase from within our sphere of influence as we have wait too long for safe exit from the Gulf.

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