Gasoline Price Changes - Federal Trade Commission

C. In 2004, the Geopolitical Outlook in Certain Areas Created Concern about the
Overall Stability of Crude Supply, and Futures Prices may have Reflected these
Concerns ............................................................................................................... 29
1. An uncertain geopolitical outlook in 2004................................................ 29
2. Linkages between futures and spot markets ............................................. 30
D. In Response to Increased Demand and Higher Prices in 2004, Crude Suppliers
Increased Output, Which Lowered Prices Somewhat, at Least Temporarily....... 31
1. OPEC increased production...................................................................... 31
2. Crude oil prices continued to escalate in 2005, but recently have become
somewhat more variable ........................................................................... 31
CHAPTER 3: SUPPLY, DEMAND, AND COMPETITION IN GASOLINE AT THE
NATIONAL LEVEL ...................................................................................... 37
I. INTRODUCTION ...................................................................................................... 37
A. The Cost of Acquiring Crude Oil Is Generally the Largest and Most Variable
Component of the Retail Price of Gasoline .......................................................... 37
B. For Most of the Past 20 Years, Real Annual Average Retail Gasoline Prices in the
U.S., Including Taxes, Have Been at Lower Than at Any Time Since 1919 ....... 37
C. Between 1984 and 2004, U.S. Demand for Gasoline Increased Substantially, Yet
Average Annual U.S. Retail Gasoline Prices Remained Relatively Stable.......... 38
D. EPA Estimates that Increased Environmental Requirements Have Likely Raised
the Retail Price of a Gallon of Gasoline from 4 to 8 Cents per Gallon in Some
Areas. .................................................................................................................... 38
II. A VARIETY OF COSTS CONTRIBUTE TO THE RETAIL PRICE OF GASOLINE
............................................................................................................................... 38
A. The Costs of Supplying Gasoline to Consumers .................................................. 38
B. Crude Oil Is Generally the Largest Component of the Retail Price of Gasoline.. 40
C. The Cost of Acquiring Crude Oil Varies More Widely than the Other Major Costs
............................................................................................................................... 41
D. Increases and Decreases in Crude Oil Prices Pass through to Wholesale and Retail
Prices..................................................................................................................... 41
III. THE U.S. IS JUST EMERGING FROM 20 YEARS OF THE LOWEST REAL
AVERAGE ANNUAL RETAIL GASOLINE PRICES SINCE 1919 ....................... 43
A. Real and Nominal Annual Average Retail Gasoline Prices in the U.S., Excluding
Taxes, from 1978 to 2004 ..................................................................................... 43
B. Real and Nominal Annual Average Retail Gasoline Prices in the U.S., Including
Taxes, from 1978 to 2004 ..................................................................................... 44
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