Retail gasoline prices, where will they land?

As the futures prices of unleaded gas tumble, what's in it for us? If you guessed absolutely fucking nothing, you are correct. The "spread" (difference) between the futures prices and the retail price has been as high as $1.06, a total rip off price. The average spread has been around $.61; excluding all taxes, transportation costs, storage costs, insurance, etc. This AM the futures prices are around $1.61 so add .61 to that and you get $2.22 without taxes. Here in SoCal we have $.36 in taxes, which means we could get "as low as" $2.58 (currently $2.89). Now if the oil companies are ripping us off (impossible) the spread between futures and retail could go to a dollar.

Now you can trade retail gasoline contracts:

CFE Gas At The Pump Futures are cash-settled futures contracts designed to track the price of regular octane gasoline sold in retail gasoline outlets across the United States. CFE Gas At The Pump Futures are based on a survey conducted by the Energy Information Administration (EIA). CFE Gas At The Pump Futures are based on the prices of regular octane gasoline sold in retail gasoline outlets across the United States and in different geographic regions within the United States, known as Petroleum Administration for Defense Districts (PADD), as determined by the EIA. The five geographic PADDs are as follows: East Coast PADD, Gulf Coast PADD, Midwest PADD, Rocky Mountain PADD, and West Coast PADD.

The final settlement value for CFE Gas At The Pump Futures is the weighted average price estimate of regular octane gasoline sold in retail gasoline outlets across the United States or in the applicable PADD, as reported by the EIA for the Monday following the third Friday of the applicable contract month.

We do not have free market capitalism in the energy markets. What we have is "State tolerated monopoly capitalism," state tolerated cartels, etc., but with the advent of a futures contract on retail prices we may have a mechanism that will suddenly make retail prices trasparent for the first time. Right now the volume is too low to trade and the open interest is low as well.