The passing of the first quarter of a given year brings with it some inevitable certainties – the progressive challenge of sticking to one’s New Year resolutions, the start of MLB spring training, March Madness and…an acute rise in gasoline prices.
While the annual passing of the first three points has been in existence for numerous decades, the same can’t exactly be said for the large bounce in gas prices.
From 1992 – 2004, gas prices increased by an average of 13 cents from the beginning of the year to the start of the summer. However, from 2005 – 2012 gas prices grew by an average of 54 cents over the first six months of the year, or four times the amount observed over the prior fourteen year period.
So far this year, gas price trends have remained true to recent form. Over the first eight weeks of the year, the average price of regular grade gasoline has grown by 45 cents, and currently prices are 16 cents higher than they were last year at this time (it’s likely that this prior-year differential will narrow over the coming weeks because pump prices grew more rapidly at the end of February last year).
We can point to certain factors that as a collective have contributed to this increased volatility in gas prices – wider-spread geopolitical unrest, a bigger global appetite for crude oil coupled with a finite supply, more expensive methods of extracting crude, pipeline and refinery bottlenecks, the advent of summer blend stock here in the U.S., etc. – and there are other underlying causes that quite frankly remain shrouded in the ether of commodity futures trading.
That being said, the point of this isn’t so much to delve into the drivers behind the changes observed in gas price trends of the past half-decade, but rather how used vehicle prices have been influenced by these spikes when they’ve occurred.
Generally speaking, the more dramatic ebb and flow of gas prices has translated into stronger demand – and higher prices – for used compact cars and hybrids and softer demand/prices for less fuel efficient segments like utilities and pickups.
Last year there was a discernible change to this pattern however. As gas prices grew through the spring so too did used car prices, but unlike in years past, used truck prices didn’t slump. In fact, truck prices actually improved subtly as is typical for the spring season.
Fast forward to late summer 2012 and we see an even more noticeable change. Gas prices once again surged after a series of pipeline and refinery complications in the U.S., only this time used vehicle prices essentially stay the course. No inordinate lift in car prices or downturn in truck prices.
So here we are two months into another new year and gas prices have begun their steep ascent once again, but as we observed last summer, used vehicle prices have remained true to pre-spike trends – no boost for cars or slip for trucks.
In the case of volatile gas prices, familiarity may still breed displeasure (or perhaps even contempt), but until gasoline prices reach deep into unknown territory – and stay there – lifestyle needs and simple preference should continue to keep consumers from abandoning their segment of choice when (not if) fuel prices bounce up and down in the future.