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Economy in Brief

U.S. Gasoline Prices Lowest Since March '07 As Demand Falls
by Tom Moeller November 4, 2008

The retail price for a gallon of regular gasoline fell by another twenty five cents last week. According to the U.S. Department of Energy survey, the price decline came on top of a twenty five cent drop during the prior week and the cost of $2.40 was the lowest since February of 2007. Prices have now fallen roughly $1.75 per gallon, or by forty percent, since their peak early this past July. The latest decline was accompanied by a drop in the average price for all grades of gasoline to $2.46 per gallon.

Yesterday, the spot market price for a gallon of regular gasoline fell another sixteen cents from last week's average to $1.41. In futures trading the November contract closed down further at $1.36 per gallon.

Weekly gasoline prices can be found in Haver's WEEKLY database. Daily prices are in the DAILY database.

The slowing of U.S. economic growth and the relatively high price for gas has reduced demand for gasoline by 4.0% y/y, according to the U.S. Department of Energy. This was the largest y/y drop since late 1995 (the latest four weeks versus the same four weeks last year). The demand for all petroleum products also has softened, falling 7.8% y/y.

These DOE figures are available in Haver's OILWKLY database.

The price for a barrel of West Texas Intermediate crude oil fell further last week to an average $65.68 per barrel, down by more than one-half from the high in July of $145.66. In futures trading yesterday, the two-month price for crude oil was $64.59 per barrel.

Last week ,prices for natural gas at $6.43 per mmbtu were near their lowest level since October of last year. The average price this month was nearly one-half below the high for natural gas prices in early-July of $13.19/mmbtu.

Weekly Prices 11/03/08 10/27/08 Y/Y 2007 2006 2005
Retail Regular Gasoline ($ per Gallon) 2.40 2.66 -20.3% 2.80 2.57 2.27
Light Sweet Crude Oil, WTI  ($ per bbl.) 65.68 68.18 -30.4% 72.25 66.12 56.60
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