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Fuel Price Volatility

The New Normal

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“Are high gas prices the ‘New Normal’? This was the question posed to the two US presidential candidates during last night’s debate. Just like office water cooler talk and Facebook chatter, the two candidates quickly escalated their differing views on this touchy subject. And no wonder, energy and fuel costs are a growing portion of Americans’ personal budgets, and people feel strongly about this issue as it directly impacts their wallets.

But no matter who is to blame, the facts remain that US fuel prices have risen in the last few years. FuelQuest recently completed an analysis of Department of Energy data, and determined that in addition to prices rising steadily, there is indeed a ‘new normal’ in daily volatility (that is the price movements within each day) for refined petroleum product commodities. Before 2004 a day-to-day move of more than 3 cents in the price of fuel was uncommon – happening around 6% of the time. But after 2004, this volatility is now happening nearly 50% of the time –impacting not only consumers at the pump but various fuel-centered businesses such as trucking companies, fuel retailers and even government fleets.

While the candidates agreed to disagree on how they would attempt to solve this issue, the crystal ball’s vision of the future remains cloudy. Nothing on the horizon seems to indicate this volatility will correct itself to pre-2004 levels – and it will remain a hot topic at the next debate and presidential election.

What are your thoughts on the gas price debate? How do you feel about the ‘New Normal’?

For more information on how to better manage your fuel or to request a white paper on this topic, please send your comments to us at http://www.fuelquest.com/contact-us. Follow our discussion on this topic on FuelQuest’s LinkedIn Group page at http://linkd.in/T0T5Ue.


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