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Economy in Brief

U.S. Gasoline Prices Again Moved Higher
by Tom Moeller January 13, 2009

Regular gasoline prices again moved higher last week. They rose ten cents to an average $1.78 per gallon after the prior week's seven cent gain, according to the U.S. Department of Energy survey. Nevertheless, the price was still down from $2.75 for all of November. Yesterday, the spot market price for a gallon of regular gasoline fell slightly to $1.05 per gallon which was off ten cents from last week's highs.

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

Product demand continues to fall despite lower prices, pulled down by the developing economic recession. The U.S. Department of Energy reported that the demand for gasoline fell by 2.1% for all of last year versus 2007. The figures for the latest four weeks fell 3.2% y/y, nearly the fastest rate of decline since late-1995 (the latest four weeks versus the same four weeks in 2007). The demand for all petroleum products also fell 2.9% y/y. These numbers are available in Haver's OILWKLY database.

The source for that reduced demand for gasoline is the cutback in vehicle miles driven which have fallen 3.5% during the twelve months ended October. The decline of roughly this magnitude, sustained as it has been for most of last year, is unprecedented. These Department of Transportation figures are available in Haver's OGJ database.

Another source for the drop in gasoline demand is the 24.9% decline in light truck sales for all of last year versus 2007. That exceeded the 10.8% decline in U.S. car sales. Sales of the relatively fuel efficient light trucks made by Toyota, Nissan and Honda fell 22.3%, 17.2% and 16.9% respectively while sales of General Motors light trucks fell 28.1% for the full year versus 2007 and Ford truck sales fell 25.8%. These figures are available in Haver's INDUSTRY statistics database.

The price for a barrel of West Texas Intermediate crude oil also moved higher last week to $44.51 per barrel, the highest level in four weeks. Prices reached their high of $145.66 last July. In futures trading yesterday, the one-month price for crude oil was $40.83.

Last week, prices for natural gas rose for the second week and reached $5.85 per mmbtu (-25.3% y/y). The latest average price was almost 50% below natural gas prices in early-July of $13.19/mmbtu.

U.S. Monetary Policy Objectives in the Short and Long Run is adapted from a recent speech given by Janet L. Yellen, President and CEO of the Federal Reserve Bank of San Francisco, and it can be found here.

Weekly Prices 01/12/09 01/05/09 Y/Y 2008 2007 2006
Retail Regular Gasoline ($ per Gallon) 1.78 1.68 -41.9% 3.25 2.80 2.57
Light Sweet Crude Oil, WTI  ($ per bbl.) 44.51 42.50 -53.0% 100.16 72.25 66.12
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