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Economy in Brief

Gasoline Prices Continue To Move Higher
by Tom Moeller May 19, 2009

Regular gasoline prices moved even higher last week. The rise to an average $2.31 per gallon of regular left them up 70 cents (43.5%) from the December low and it was the highest level since early-November. Yesterday, cash market prices traded higher still at $1.77 per gallon versus $1.66 averaged last week and these were the highest prices since last October. The figures are reported by the U.S. Department of Energy and can be found in Haver's WEEKLY & DAILY databases.

Higher crude oil prices are behind the rise in gasoline costs. Crude prices averaged $58.07 last week for a barrel of West Texas Intermediate, up from the December low of $32.37 per barrel. Yesterday, crude oil prices rose by another $1.00 to $59.03. Prices reached a high of $145.66 last July. The latest increases occurred despite a 3.0% rise in crude oil production during the latest four weeks versus last year. The figures on crude oil production are available in Haver's OILWKLY database.

Higher gasoline prices & economic weakness continued to lower gasoline demand last week by 2.5% y/y. The change in demand is measured using the latest four weeks versus the same four weeks in 2008. Demand for all petroleum products was down 7.9% y/y led by a 41.4% drop in demand for residual fuel oil and a 16.9% drop in distillate demand. In addition, the price gains have occurred despite an 11.0% rise in inventories of crude oil & petroleum products. These numbers are available in Haver's OILWKLY database.

Finally, the price of natural gas has shown life. Gains during the last two weeks raised the price to $4.23 per mmbtu (-62.7% y/y), the highest level since early March. However, still near the lowest level since 2002, the latest average price was down by two-thirds from the high reached in early-July of $13.19/mmbtu.

The Effect of the Fed's Purchase of Long-Term Securities on the Yield Curve from the Federal Reserve Bank of St. Louis can be found here.

Weekly Prices 05/18/09 05/11/09 Y/Y 2008 2007 2006
Retail Regular Gasoline ($ per Gallon, Regular) 2.31 2.24 -39.1% 3.25 2.80 2.57
Light Sweet Crude Oil, WTI  ($ per bbl.) 58.07 51.07 -54.5% 100.16 72.25 66.12
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