NEW YORK - Crude-oil prices have fallen to new lows for this year. So you'd think gasoline prices would sink right along with them.
On Thursday, for example, crude oil closed just under $34 a barrel, its lowest point for 2009. But the national average price of a gallon of gasoline rose to $1.95 on the same day, its peak for the year. On Friday, gasoline went a penny higher.
To drivers once again grimacing as they tank up, it sounds like a conspiracy. But it has more to do with an energy market turned upside-down, with gasoline cut off from its usual economic moorings.
The price of gasoline is indeed tied to oil. It's just a matter of which oil.
The benchmark for crude-oil prices is West Texas Intermediate, drilled exactly where you would imagine. That's the price, set at the New York Mercantile Exchange, that you see quoted on business channels and in the morning newspaper.
Right now, in an unusual market trend, West Texas crude is selling for much less than inferior grades of crude from other places around the world. A severe economic downturn has left U.S. storage facilities brimming with it, sending prices for the premium crude to five-year lows.
But it is the overseas crude that goes into most of the gasoline made in the United States. So prices at the pump will probably keep going up no matter what happens to the benchmark price of crude oil.
"We're going definitely over $2, and I bet we'll hit $2.50 before spring," said Tom Kloza, publisher and chief oil analyst at Oil Price Information Service. "This is going to be an unusual year."
On the last day of 2008, gasoline went for $1.62 on average, according to the auto club AAA, the Oil Price Information Service, and Wright Express, a company that tracks transportation data.
The recession in the United States has dramatically cut demand for crude oil, and inventories are piling up. So prices for West Texas crude have fallen well below what oil costs from places like the North Sea, Saudi Arabia, and South America.
That foreign oil sells in some cases for $10 more per barrel - and that doesn't even include shipping.
Brent North Sea crude, which feeds some East Coast refineries - and therefore winds up at many gas pumps around the United States - now costs about $7 more per barrel than the West Texas crude. Deutsche Bank AG analysts say the trend should continue.
Historically, West Texas International crude has cost more. So nobody bothered building the necessary pipelines to carry it beyond the nearby refineries in the Midwest, parts of Texas, and a handful of other places.
Now that the premium oil is suddenly very inexpensive, refiners elsewhere cannot get their hands on it.
"It's so cheap," said Lynn Westphall, the senior vice president of external affairs at San Antonio-based Tesoro Corp., which owns a half dozen refineries on the West Coast and Hawaii. "But you can't just build a pipeline to everywhere. We know we can't get it."
Tesoro's refineries in North Dakota and Utah use locally drilled oil and Canadian oil, which also has been running about $10 more per barrel than West Texas crude.
At the same time, refiners have seen the same headlines as everyone else about job losses and consumer spending. They've slashed production just to avoid taking losses on gasoline no one will buy. Result: Higher prices.