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Economy in Brief

Gasoline Prices Decline Further
by Tom Moeller July 14, 2009

The loss of forward momentum in the U.S. economy continued to weaken prices in the energy market. Yesterday, the cash market price for a gallon of regular gasoline fell to $1.60 versus the daily high of $2.04 reached in the middle of June. Retail gas prices also have moved lower. The pump price for regular gasoline fell last week to an average $2.53 per gallon, down sixteen cents from the high. Nevertheless prices remained up by nearly one dollar from the December low and were at the highest level since late-October. The figures are reported by the U.S. Department of Energy and can be found in Haver's WEEKLY & DAILY databases.

Lower crude oil prices have led the decline in refined product prices. Yesterday the one-month futures price for light sweet crude oil dropped to $59.69 from an average $61.48 last week. Prices had reached a daily high of $72.68.

The weakness in energy prices is against the backdrop of soft demand. The ongoing recession reduced the demand for motor gasoline by 1.4% y/y during the last four weeks. The rate of decline has moderated from the 4.8% shortfall this past autumn. Demand for distillate also is off sharply though residual fuel oil demand has moved higher. Finally, oil remains plentiful as evidenced by a 14.4% y/y rise in inventories of crude oil & petroleum products. The figures on crude oil inventories are available in Haver's OILWKLY database.

Natural gas prices fell to a new seven-year low. Last week's average price of $3.28 per mmbtu (-73.2% y/y) was down from a recent high of $4.02. Current prices are down by three-quarters from the high reached in early-July of $13.19/mmbtu.

Weekly Prices 07/13/09 07/06/09 Y/Y 2008 2007 2006
Retail Regular Gasoline ($ per Gallon, Regular) 2.53 2.61 -38.5% 3.25 2.80 2.57
Light Sweet Crude Oil, WTI  ($ per bbl.) 61.48 69.36 -56.1% 100.16 72.25 66.12
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