Neck-breaker volatility in opposite directions in an unsettled market.
By Wolf Richter for WOLF STREET.
People are painfully aware of what happened to gasoline prices at the pump over the past two weeks, but what happened to diesel prices is even more astounding.
The average retail price of No. 2 highway diesel – to be passed on in the costs of everything that arrives at the house, office, store, construction site, or manufacturing plant – has been rising since November 2020, and on Monday jumped to a record $5.25 a gallon, the US Energy Department’s EIA reported late Monday, based on its surveys of gas stations conducted during the day. And this comes after the prior week’s spike.
Over those two weeks, diesel spiked by $1.15, or by 28%! This was by far the biggest two-week spike in the EIA’s data going back to 1994. Diesel is now up 64.5% from the same week last year.
The prior record high for diesel of $4.76 occurred in July 2008, after which it got blown out of the water by the demand destruction resulting from the Financial Crisis and the housing bust. Adjusted for CPI, $4.76 in July 2008 would be $6.40 today. So in “real” terms, today’s $5.25 a gallon is still not there yet.
The average price of all grades of gasoline at the pump jumped to a record $4.32 a gallon on Monday, according to the EIA late Monday, up by 19.6% over the past two weeks, also the biggest two-week jump in the data going back to 1994. Year-over-year, gasoline was up 51.2%.
But adjusted for CPI, we’re not there yet either. In July 2008, gasoline hit $4.11 before demand destruction from the Financial Crisis knocked it down. In today’s dollars, this would amount to $5.30 a gallon.
But wait a minute… Crude oil futures and gasoline futures plunged.
Crude oil WTI futures plunged 24% in one week, from over $130 last Monday to $97.96 at the moment, which put it back where it had been on March 1, when it had punched through the $100-mark for the first time since 2014, in white-knuckle volatility that seems to be afflicting everything these days (chart via Investing.com):
Still, even after that plunge, WTI remains far higher than it had been over the past seven years. And what a neck-breaker: from minus $37 in April 2020 to a closing high of $127 on March 6, 2022, and now to $97.96:
Gasoline futures plunged 21.4% in one week, from a high of $3.87 on March 7 to $3.04 at the moment, which would still be the highest since 2014. And even as gasoline futures plunged over the past week, gasoline retail prices — in the chart above — spiked during the same period (chart via Investing.com).
At the tourist gas station in my neighborhood in San Francisco, regular gasoline hit $5.99 a few days ago, and the two higher grades punched through the sound barrier of $6, even as gasoline futures were already plunging, and for now, prices at the pump, which were so record-quick to skyrocket, have turned out to be sticky at these record sky-high levels (photo by Wolf Richter):
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