Motor gasoline assessment, Spring 1997

The springs of 1996 and 1997 provide an excellent example of contrasting gasoline market dynamics. In spring 1996, tightening crude oil markets pushed up gasoline prices sharply, adding to the normal seasonal gasoline price increases; however, in spring 1997, crude oil markets loosened and crude oil prices fell, bringing gasoline prices down. This pattern was followed throughout the country except in California. As a result of its unique reformulated gasoline, California prices began to vary significantly from the rest of the country in 1996 and continued to exhibit distinct variations in 1997. In addition to the price contrasts between 1996 and 1997, changes occurred in the way in which gasoline markets were supplied. Low stocks, high refinery utilizations, and high imports persisted through 1996 into summer 1997, but these factors seem to have had little impact on gasoline price spreads relative to average spread