Saturday, June 28, 2014

Are Gas Prices Rising?

One of the perks of being an analyst is that you tend to collect data for the fun of it... Because you never know when you might need to do a quick analysis. In this particular case, the opportunity presented itself when my mom shared a CNBC article about the inflation of food and gas costs.

Food prices + gas prices = Stressed consumers
"It's official—summer is here. But as Americans hit the road and fire up their grills, they've noticed that they're paying more for almost everything this year. And it's making some change their spending habits."
The article talks about food prices rising, and then talks about gas prices.
"If it's not tough enough at the grocery store, there's also plenty of pain at the pump. The national average for a gallon of regular gasoline is now up to $3.68, according to AAA. That's up 14 cents from the same time a year ago, a jump of roughly 4 percent.  
Retail gas prices are rising as crude oil prices rise due to tensions in global hot spots like Russia, Ukraine and Iraq. Brent crude, the international benchmark, has risen almost 6 percent in the last three months, while West Texas Intermediate, the domestic product, is up about 5 percent in the same period."
Like I said, being an analyst and tracking data has it's perks because it means I can check these stats against my personal experience. Here's a chart of actual gas prices I actually paid over the last couple of years:

Clearly gas prices are rising in recent months like the article claims, but is it getting to concerning levels yet?


The same time last year, I was paying almost the same price on average at the same gas station (4 cents or 0.7% higher today). From a stats perspective, I consider that the same price.

There is also clearly a seasonal spike every summer, and this last winter was actually CHEAPER than last winter's prices. So we should be thankful for the savings earlier this year and shouldn't be surprised to see prices rising.

Now, could there be a rubber-band effect where lower winter prices cause summer prices to jump higher to make up for the corporate company's winter loss in revenue? Definitely. If anything, I would plan on that.

That and move to Oregon because their gas prices are apparently better than other places in the country (that sentence is for you Mom).

The other thing you can do is start changing your habits. Interestingly, the article paints this as a bad thing (you have to sacrifice and spend less). I disagree. You should always aim to spend less. If this is the reason you needed to start eating less and riding your bike on small errands. Excellent! That will have good consequences on your health and wallet despite the inflation "problem".

For me, this is the time of year I start riding my bike all time time: the weather is nice, the days are longer, and gas prices are higher. Combine that with the fact that I live in a place where gas prices apparently don't get as high as other places (and I don't even have to pump my own gas!), and I'll be saving significantly this summer.