“The big thing we’ve seen kind of over the last month, over this week is a very pronounced fall off in both the value of crude oil globally as well as the kind of relative value of gasoline.”Petroleum analyst predicts 12 cent per litre gas price drop starting July 7
The value of gasoline is another way of referring to the refinery margin, or the difference in price between crude oil and refined gasoline.Prices at the pump have spiked both from higher crude prices and high refinery margins because of the limited capacity at processors. Johnston said that while crude price have been hitting upwards of US$120 a barrel, consumers have been paying the equivalent of US$180 a barrel because of the refinery margins.
Those margins however dropped about 25 per cent over Tuesday and Wednesday, and while it’s not clear what exactly caused the reversal, Johnston said it be worries about future demand linked to recession fears, speculators unwinding bets on future prices, or more refinery capacity coming online after maintenance season.“Right now, unfortunately, it’s a billion dollar question. And I think that the challenge is that we don’t fully know exactly what’s driving it down.
He said prices will likely stay volatile, noting that the price of crude oil was trending upwards of five per cent on Thursday. “What we’re likely going to see is kind of, you know, persistent and elevated volatility prices, but I don’t think we’re at a stage yet or we’re going to be expecting kind of true and kind of relief at the consumer level for the rest of the summer.”
Just because they drop doesn’t mean we aren’t technically in a recession.