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Economy in Brief

Gasoline Prices Reach The Highest Level Since Last October
by Tom Moeller June 16, 2009

Speculation that the U.S. economic recovery is taking hold drove regular gasoline prices even higher last week to an average $2.67 per gallon of regular. Gasoline prices now have risen more than $1.00 per gallon, or by more than one-half, from the December low to the highest level since late-October. Yesterday, the cash market price for a gallon of regular gas rose further to $2.02 per gallon versus $1.96 averaged last week. These also 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.

Evidence that the economic rebound is finally taking hold may be evidenced in the figures for vehicle-miles driven. The year-to-year change in miles driven still is negative, but the y/y change of -0.7% is the least since March and is well improved from the -5% comparisons of this past fall. 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 6.9% y/y in the latest week led by a 19.7% drop in demand for residual fuel oil and a 12.8% drop in distillate demand. These numbers are available in Haver's OILWKLY database.

Higher crude oil prices are behind the rise in gasoline costs. Crude prices averaged $70.83 last week for a barrel of West Texas Intermediate, up from the December low of $32.37 per barrel. Yesterday, crude oil prices held steady at $70.62 and prices reached a high of $145.66 last July. The latest price increases occurred despite a 3.9% year-to-year rise in crude oil production during the latest four weeks. Further more, they have occurred despite a 13.7% y/y rise in inventories of crude oil & petroleum products. The figures on crude oil production and inventories are available in Haver's OILWKLY database.

Finally, the gains in the price of natural gas paused again last week and it fell back to $3.56 per mmbtu (-71.8% y/y). The latest price was nearly the lowest since 2002 and is down by two-thirds from the high reached in early-July of $13.19/mmbtu.

Economic and Environmental Impacts of U.S. Corn Ethanol Production and Use from the Federal Reserve Bank of St. Louis is available here.

Weekly Prices 06/15/09 06/08/09 Y/Y 2008 2007 2006
Retail Regular Gasoline ($ per Gallon, Regular) 2.67 2.62 -34.5% 3.25 2.80 2.57
Light Sweet Crude Oil, WTI  ($ per bbl.) 70.83 68.10 -47.4% 100.16 72.25 66.12
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