Have gas prices peaked?

Gas prices at 76 station, Los Angeles, California, with Gas Service road sign and nozzle, on texture with UP arrow CBS/AP

(MoneyWatch) Consumers could finally get relief at the pumps. Gas prices may have peaked for the year, according to AAA. Regular gasoline has decreased slightly over the past five days to $3.907 a gallon, after surging 20 percent and topping out on April 4.

Before popping the champagne corks and celebrating lower gas prices, let's remember what caused the spike. The biggest culprit for the rise in prices at the pumps is the $28 rise in crude oil that occurred from $75/barrel in October to $103 today. The reason is that crude oil is the largest contributor to the price at the pumps.

Here's a break down of a $1 at the pump as of January 2012, according to the Energy Information Administration:

  • Crude oil: 76 cents
  • Taxes: 12 cents
  • Distribution and marketing: 6 cents
  • Refining costs and profits: 6 cents

Don't blame American's appetite for energy on the recent move, because Americans' gas consumption is at 11-year lows (perhaps the only positive outcome from the recession). Consumers have responded to the 2012 spike by continuing the trend of using less gasoline. According to MasterCard Inc.'s SpendingPulse Survey, Americans have purchased 5.3 percent less gasoline so far this year than in 2011.

High gas prices: Are traders to blame?
Oil prices poised to hit 150-year high
Free gas for life

So what was behind the big jump in crude prices? Back in October, economists and investors worried that the European debt crisis would drag down the world economy. As a result, crude oil and global stocks fell to 52-week lows. From October to the beginning of February, European fears simmered down; economic data improved; and Indian and Chinese demand increased for raw materials. The result was a near-20 percent bump in stocks and an increase in crude oil from $75 to $90/barrel.

All of that would have been fine, but then tensions over Iran heated up and crude oil continued to rise. Investors speculated that escalating tensions in the Middle East would cause major disruptions in the world oil markets. Some of those concerns have been quelled, which accounts for some of the recent slide in oil prices, but it's clear that further negative developments out of Iran would likely push prices at the pump to over $4 per gallon. This weekend could see new developments, as talks between Iran and the United States and its allies take place. The goal is to resolve the dispute over Iran's nuclear plans and tamp down the rhetoric.

Understandably, most consumers don't really care why gas prices are up; they just want relief, which is why the news from AAA is welcome. That said, don't count on the "peak price at the pump" theory just yet.

  • Jill Schlesinger On Twitter»

    View all articles by Jill Schlesinger on CBS MoneyWatch »
    Jill Schlesinger, CFP®, is the Emmy-nominated, Business Analyst for CBS News. She covers the economy, markets, investing and anything else with a dollar sign on TV, radio (including her nationally syndicated radio show), the web and her blog, "Jill on Money." Prior to her second career at CBS, Jill spent 14 years as the co-owner and Chief Investment Officer for an independent investment advisory firm. She began her career as a self-employed options trader on the Commodities Exchange of New York, following her graduation from Brown University.

Comments

CBSN Live

pop-out
Live Video

Market Data

Watch CBSN Live

Watch CBS News anytime, anywhere with the new 24/7 digital news network. Stream CBSN live or on demand for FREE on your TV, computer, tablet, or smartphone.

Watch Now

Market News

Stock Watchlist

New Android App

For your Android phone and tablet, download the FREE redesigned app, featuring CBSN, live 24/7 news.

Download
The all new
CBS News App for Android® for iPad® for iPhone®
Fully redesigned. Featuring CBSN, 24/7 live news. Get the App