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Economy in Brief

Gasoline Prices Up On Stronger Demand
by Tom Moeller March 22, 2006

Last week's jump in the U.S. average price for gasoline to $2.50 per gallon lifted prices 13.6% above the yearend 2005 level. This strength certainly reflects some pass through of this year's rise in crude oil prices.

Crude costs are up 4.2% year to date and 8.1% y/y though the spot price for WTI crude at $60.58 is off its high reached earlier in the year of $67.83 per barrel.

Supplies of gasoline, however, are plentiful. Strong imports of motor gasoline (+31.5% y/y) have offset weakness in gasoline production (+1.0% y/y). That has lifted gasoline inventories 17.8% (1.1% y/y) from the low early last September. (These figures are available in the Haver OILWKLY database.)

Drivers seem to be growing accustomed to higher gasoline prices. Since last year the four week average level of gasoline consumption, through early March, rose 0.6%.

The just-released figures from the Federal Highway Administration (MVMPM@USECON in the Haver database) indicate that passenger car miles driven during 2004 rose 2.0% from the year prior and rose 20.4% during the last ten years.

Reducing Gasoline Consumption: Three Policy Options is a 2002 study from the Congressional Budget Office.

The Annual Energy Outlook 2006 with Projections to 2030 from the U.S. Energy Information Administration is available here.

Weekly Prices 03/20/06 12/27/05 Y/Y 2005 2004 2003
US Retail Gasoline Price per Gallon $2.50 $2.20 18.7% $2.27 $1.85 $1.56
Light Sweet Crude Oil, WTI  (per bbl.) $60.58 $58.16 8.1% $58.16 $41.78 $32.78
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