Gas prices up? All in your head, data says

By Emily Kaiser - Analysis

WASHINGTON (Reuters) - High gasoline prices got you down? Come to the land of seasonal adjustment, where the sun is always shining and gas prices fell 2 percent last month.

What? You paid more? Well, in the real world, gasoline prices did rise by a sharp 5.6 percent in April from a month earlier, but the way that the Bureau of Labor Statistics adjusts the figures to smooth out seasonal oddities, it appeared to be down in the consumer price index released on Wednesday.

"The drop makes absolutely no sense. Where does the BLS buy their gas?" asked Mark Vitner, senior economist at Wachovia.

No, there is not a magical government gas station where pump prices remain below $3 per gallon while the national average stands at $3.72.

Another branch of the very same U.S. government, the Department of Energy's Energy Information Administration, said average retail gas prices actually shot up 9.5 percent in April from March.

So who's right?

It has to do with how the Bureau of Labor Statistics compares current price trends with the norm.

Typically, gasoline prices rise sharply in April as the arrival of warmer weather encourages people to drive more. The government data is adjusted to reflect that pattern so that it can highlight variations from the trend. Because gas prices did not rise as much last month as they typically do in April, the seasonal adjustment showed that prices fell.