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Economy in Brief

Gasoline Prices Fall Again
by Tom Moeller July 21, 2009

Recession in the U.S. economy prompted a lower retail price for gasoline last week. The pump price for regular gasoline fell to an average $2.46 per gallon, down twenty-three cents from last month's high. Nevertheless, prices remained up by eighty-five cents (53%) from the December low. In the cash market, gasoline prices yesterday continued to rally off last week's low. At $1.75 per gallon the price was up from the low of $1.60. The figures are reported by the U.S. Department of Energy and can be found in Haver's WEEKLY & DAILY databases.

Crude oil prices also fell last week, but not by as much as gasoline costs. Light sweet crude oil prices (WTI) fell to $61.27 per barrel, off nearly ten dollars from last week's high of $70.83. Yesterday the one-month futures price for light sweet crude oil recovered and moved up to $63.98 per barrel. Prices had reached a daily high of $72.68.

The ongoing recession lowered the demand for motor gasoline by 2.2% 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 by a sharp 21.5% though residual fuel oil demand has moved higher. Finally, oil remains plentiful as evidenced by a 13.7% y/y rise in inventories of crude oil & petroleum products. The figures on crude oil inventories are available in Haver's OILWKLY database.

The weakening of natural gas prices stabilized last week at the seven-year low. Last week's average price of $3.28 per mmbtu (-70.8% y/y) was down by three-quarters from the high reached in early-July of $13.19/mmbtu.

Weekly Prices 07/20/09 07/13/09 Y/Y 2008 2007 2006
Retail Regular Gasoline ($ per Gallon, Regular) 2.46 2.53 -39.4% 3.25 2.80 2.57
Light Sweet Crude Oil, WTI  ($ per bbl.) 61.27 61.48 -54.7% 100.16 72.25 66.12
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