Gasoline Price Changes - Federal Trade Commission

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GASOLINE PRICE CHANGES: 60. EIA, supra note 51, at September 2004. 61. EIA, NORWAY COUNTRY ANALYSIS BRIEF (Dec. 2003), at http://www.eia.doe.gov/emeu/cabs/norway.html; EIA, DOE/EIA-0340(03)/1, 1 PETROLEUM SUPPLY ANNUAL 2003, at 54 tbl.21 (2004) [hereinafter EIA, PETROLEUM SUPPLY], at http://tonto.eia.doe.gov/FTPROOT/petroleum/0340301.pdf. Norway was the seventh largest oil producer in 2003. EIA, Non-OPEC Fact Sheet, “Top World Oil Producers, 2003,” at http://www.eia.doe.gov/ emeu/cabs/topworldtables1_2.html (last visited June 28, 2005). 62. EIA, Non-OPEC Fact Sheet, “Top World Oil Exporters, 2003,” at http://www.eia.doe.gov/emeu/cabs/ topworldtables1_2.html (last visited June 28, 2005). In 2003, Norway exported 3.02 million barrels per day. 63. IEA, OIL MARKET REPORT, Oct. 12, 2004, at 18, at http://omrpublic.iea.org/omrarchive/12oct04full.pdf. 64. Id. 65. EIA, PETROLEUM SUPPLY, supra note 61, at 54 tbl.21; EIA, Top Suppliers, supra note 9. 66. EIA, supra note 51, at September 2004. 67. Nigeria was the world’s eleventh largest oil producer in 2003. EIA, NIGERIA COUNTRY ANALYSIS BRIEF (Aug. 2004), at http://www.eia.doe.gov/emeu/cabs/nigeria.html; EIA, PETROLEUM SUPPLY, supra note 60, at 54 tbl.21; EIA, Top Suppliers, supra note 8. 68. EIA, supra note 51, at September 2004. One of the strikes limited Nigeria’s ability to import refined products (Nigeria has a poor refining infrastructure and has to import most of its gasoline) but not its ability to export crude oil. Id. 69. Id. In the middle of November, the Russian government moved ahead with plans to break up Yukos, announcing that it would auction off a majority stake in Yukos’ main production unit. Oil Prices Climb on U.S. Supplies (WTOP Radio Network broadcast, Nov. 19, 2004). 70. EIA, supra note 51, at September 2004. 71. IEA, supra note 63. By September 2004, Nigeria increased its exports to 2.45 million barrels per day. From Nigeria’s exports, the U.S. imported an average of over 1 million barrels per day. EIA, MONTHLY ENERGY REVIEW, Oct. 2004, at 51 tbl.3.3d, at http://tonto.eia.doe.gov/FTPROOT/multifuel/mer/00350410.pdf. 72. EIA, A Big Wave or the Beginning of High Tide?, THIS WEEK IN PETROLEUM, July 28, 2004, at http://tonto.eia.doe.gov/oog/info/twip/twiparch/040728/twipprint.html. 73. IEA, supra note 46, at 43 tbl.3. 74. Id. at 16-17. 75. EIA, supra note 38. 76. EIA, Looking Into the Crystal Ball, THIS WEEK IN PETROLEUM, Feb. 9, 2005, at http://tonto.eia.doe.gov/oog/ info/twip/twiparch/050209/twipprint.html. 36 FEDERAL TRADE COMMISSION, JUNE 2005
CHAPTER 3. SUPPLY, DEMAND, AND COMPETITION IN GASOLINE AT THE NATIONAL LEVEL. I. INTRODUCTION. We now move the focus from crude oil to gasoline. We first explore yearly average prices and other factors at the national level. A national perspective provides an important historical and current overview, revealing trends in gasoline prices, consumer demand, and gasoline supplies. Nonetheless, a national perspective will not capture important differences among regions and localities. Accordingly, in subsequent chapters, we address issues at both the regional and local levels. A. The Cost of Acquiring Crude Oil Is Generally the Largest and Most Variable Component of the Retail Price of Gasoline. A number of cost components – crude oil, refining, transportation, distribution and marketing, taxes, and profits – contribute to the retail price of a gallon of gasoline. This chapter examines how much each type of component contributes and which is most variable. Not surprisingly, over the last 20 years, crude oil generally has been the largest and most variable cost component of the retail price of gasoline. This finding aligns with the finding reported in Chapter 2 that, over the last 20 years, changes in crude oil prices explain 85 percent of the changes in retail gasoline prices in the U.S. 1 B. For Most of the Past 20 Years, Real Annual Average Retail Gasoline Prices in the U.S., Including Taxes, Have Been Lower than at Any Time Since 1919. This chapter examines both real and nominal annual average retail gasoline prices, excluding and including taxes, in the U.S. over various time periods. “Real” prices are adjusted for inflation and therefore reflect the different values of a dollar at different times; they provide more accurate comparisons of prices in different time periods. We also report the more familiar, “nominal” prices – that is, literal prices shown at the time of purchase – over the years. Prices that exclude taxes give a better sense of market dynamics, because gasoline taxes vary from state to state and are not set by market forces. The data show that, for the last 20 years, real national annual average retail prices for gasoline, including taxes, have generally been below $2.00 per gallon. By contrast, between 1919 and 1985, real national annual average retail gasoline prices were above $2.00 per gallon more often than not. If taxes are excluded, the data show that real annual average retail gasoline prices in the U.S. did not rise above $1.20 per gallon between 1986 and 2003, and the 2004 real annual average retail gasoline price in the U.S. – $1.44 per gallon – remains well below the 1981 high of $2.10 per gallon. 2 Average U.S. retail prices, including taxes, 3 have been increasing since 2003, from an average of $1.56 in 2003 to an average of $2.04 in the first five months of 2005, but it is difficult to predict whether these increases represent the beginning of a longer term trend. 4
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Federal Trade Commission DEBORAH PL
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GASOLINE PRICE CHANGES: The vast ma
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GASOLINE PRICE CHANGES: $ The World
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THE DYNAMIC OF SUPPLY, DEMAND, AND
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CHAPTER 5. STATE AND LOCAL POLICIES
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Percentage of Customers Lost to 1%
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Retail Price (cents per gallon) 220
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Share (Percent) 80 70 60 50 40 30 2
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Price (Cents per Gallon) 200 190 18
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6. GAO, supra note 5, at 20. 7. Id.
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Herfindahl-Hirschman Index (HHI) Th
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