This week's analysis comes from North America and looks at falls in Gulf Coast gasoline over recent weeks.
Gulf Coast gasoline falls: was it Biden or the trade who done it?
By Jeffrey Bair
Markets will do it every time.
Just as the politicians try to get a handle on dramatic swings in value, the commodities trade starts to fix the problem on its own.
That’s what’s happening in US gasoline right now. A few weeks after pump prices set records, trade in gasoline blendstock has lost support, pointing to inflation relief ahead.
US leaders are considering solutions including gas tax relief, waivers of RVP summer standards, and (according to Reuters) considering one trade house’s request to ship gasoline by cargo domestically on non-US ships. The federal Jones Act prohibits this as a way to protect US shipping.
President Biden has weighed in, leaning on the energy sector to act to alleviate pressure on consumers. During the debate, the value of CBOB in US markets has begun to fall.
The dramatic drop reflects that US gasoline supply was never really in jeopardy (at least not to the extent headlines would lead you to believe), with the recent price shock tied mostly to regional increases in markets such as New York, the Upper Midwest and California. Hence, the market was able, for now, to easily correct the retail jumps.