*** Movements in energy prices have been a major influence on overall inflation this year. In the second quarter, gasoline prices rose rapidly as a marked pickup in gasoline demand strained refinery capacity and resulted in sharply higher profit margins.
In May and June, refinery and marketing margins rose to levels that were 25 cents to 30 cents per gallon over typical spreads going into the summer driving season. As a consequence of the steep run-up in prices, demand for gasoline eased, and an accompanying increase in inventories helped to reverse the bulge that had occurred in refinery and marketing margins.