Gas prices retreated for a fifth straight week, reaching their lowest level in eight weeks. As of June 15th, weekly prices were down 9 cents for regular and down 10 cents for premium gasoline.
Key Takeaways
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As of June 15th, the national average for regular gasoline is $4.05 per gallon and premium is $5.04.
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A $2.33 regional price gap exists between California’s high of $5.68 and Indiana’s low of $3.35.
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West Texas light crude oil dropped 11.6% weekly to close at $80.75 on June 15th
Currently, the national average for regular gasoline stands at $4.05 per gallon, with premium averaging $5.04. Though down from recent highs, these prices represent a significant jump since the start of the year, with regular gas up 44% and premium up 34%. Compared to one year ago, regular gas is 29% more expensive (up from $3.14), while premium has seen a 24% increase (up from $4.06).
Gas Prices by State
According to GasBuddy, regional price disparities have widened significantly, leaving a $2.33 gap between the nation’s highest and lowest averages. California currently holds the highest average for regular gas at $5.68, while Indiana offers the cheapest at $3.35. While every state in the nation is averaging over $3.00 per gallon, a clear geographic divide has emerged.
The West Coast continues to lead the nation in fuel costs, with four states averaging between $5.00 and $6.00 (Alaska, Hawaii, Washington, and California). In the middle tier, there are now 18 states across the West, Northeast, and Midwest falling into the $4.00 to $5.00 range. Conversely, there are now 28 states below the $4.00 threshold, with these lowest averages concentrated mainly in the South.
Behind the Price: Components and Inflation
To understand these surges, it is helpful to look at the "price at the pump" as a sum of its parts. The retail price of gas is made up of four main components: 1) cost of crude oil, 2) refining costs and profits 3) distribution and marketing costs and profits, and 4) taxes.
The volatility in these components, particularly crude oil, has been clearly reflected in recent years in both the Consumer Price Index (CPI) and Personal Consumption Expenditures (PCE). In the following chart, we take a look at gasoline prices adjusted for inflation to show the "real" cost to consumers.
For an easier way to visualize these effects, this next chart overlays the nominal price with the inflation-adjusted "real" price for both regular and premium gasoline.
For additional perspective on how energy prices are factored into the CPI, see Inside the Consumer Price Index.
Crude Oil Market
This next chart shows the West Texas light crude oil price over the past 8 months. As of June 15th, WTIC end-of-day spot price for crude oil closed at $80.75, an 11.6% decline from the previous week and the lowest level since early March.
The final chart provides a monthly overlay of West Texas light crude, Brent crude, and unleaded gasoline end-of-day spot prices, showing the tight correlation between global benchmarks and domestic retail costs.
ETFs associated with gasoline WTIC crude oil, and Brent crude oil include: United States Gasoline Fund LP (UGA), United States Oil Fund LP (USO), United States Brent Oil Fund LP (BNO), and Invesco DB Oil Fund (DBO).
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