If oil is at a record high, why aren't gasoline prices higher? One big reason comes every year at this time -- the seasonal decline in summer driving, says CNBC's Sharon Epperson.
Epperson was at the Nymex Wednesday for another record-setting session. She says analysts do not expect to see gasoline prices immediately follow crude into record territory. However, she says protracted high prices for oil would have gasoline ultimately moving higher.
"Prices at the pump were over $3 in May, back when crude was in the mid $60s (per barrel)," she said.
Crude at Nymex today finished at a record $79.91 per barrel, up $1.68, or 2.1%, after hitting a new intraday high of $80.18 per barrel. Gasoline at the NYMEX climbed 3.49 cents, or 18%, to $2.0160 per gallon.
"Look at the percentage increase in crude prices versus the price of gasoline since the late spring," she said. Gasoline futures are now trading 20% below those May highs.
Epperson says refining margins have contracted considerably since earlier in the summer. That factor is showing up in gasoline cracks, which is the difference between the price of crude and the wholesale price of gasoline.
"The crack has fallen more than $30 since May. Analysts tell me that they are seeing gasoline demand fall, which usually happens after Labor Day, and they are also expecting a lighter winter turnaround season," says Epperson. "Winter turnaround for refiners is when they prepare to cross over to heating oil production from gasoline production."
Epperson says another factor that could help keep gasoline prices at current levels is ethanol. Opis analyst Tom Kloza told her that ethanol prices are about 40 cents below reformulated gasoline futures. Kloza says ethanol is going to make its way into the U.S. markets that haven't embraced it yet, and that's likely to keep the lid on unleaded gasoline prices.
Refinery outages have plagued gasoline supply all summer, and the threat of hurricanes has kept markets nervous. So far, key Gulf installations have been spared, but the threat remains until late into the fall and the market will remain nervous about storms. For instance, tropical storm Humberto, now approaching Texas, has the market on serious storm watch. Ships have been stopped from going through the Houston ship channel.
Traders are also tracking tropical storm activity in the Atlantic, she said.
"If one of these storms hits oil and gas installations in the Gulf of Mexico, all bets are off. Wholesale gasoline prices may skyrocket and consumers will feel it at the pump," Epperson says.