Now that gas prices are on the decline again, everyone has forgotten about them and moved on to the new crisis du jour.
However, we are in an election, and politicians love to fan the flames of the whole gas price conspiracy fire, alleging price fixing/gouging and the like.
I’m no fan of the big energy companies, but I’ve always known that retail gasoline prices were strongly correlated with crude oil prices. The constant rantings about gas prices over the summer made me curious about the nature of the correlation.
I plotted the last 10 years of gas vs. crude oil. (real dollars, both adjusted to an index of 100 in 1997, Weekly data from here, Oil is blue, Gas is red)
The prices are highly correlated, but the gas price fluctuations are actually “smoother” than the oil prices. You can see in the late 90s gas failed to fall as quickly as oil, and over the past year, how gas has not risen as quickly as oil.
The general trend, however, is strong correlation. As I can tell, there’s no evidence to indicate any sort of conspirancy, price fixing, or price “gouging” that seems to be constantly implied by popular media.
What’s your interpretation of the data?