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Economy in Brief

Gasoline Price Increase Stabilizes After A One Dollar Rise This Year
by Tom Moeller August 18, 2009

The strong rise this year in gasoline prices stabilized last week. The pump price for regular gasoline held at an average $2.64 per gallon and that was down a nickel from last month's high. Despite this w/w stability, however, prices remain roughly one dollar (59%) higher versus the December low. Yesterday, the cash market price for gasoline of $1.87 was down from last week and down from the $1.99 averaged the week earlier. Nevertheless, gasoline prices were up off the early-July 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 are slightly off their high. Light sweet crude oil prices (WTI) dipped last week to $69.65 per barrel but they've roughly doubled this year. Yesterday the spot market price for light sweet crude oil fell back again, to $66.75 per barrel. Prices had reached a daily high of $72.68 earlier in July.

Of late, the demand for gasoline hit a plateau after an earlier seasonal run-up. During the last four weeks since May, the demand for gasoline has moved sideways and is down by 3.1% y/y. Though that compares to a nearly 5% rate of decline last fall, the relative strength is diminishing. Demand for distillate also is off a sharp 20.7% though residual fuel oil demand has moved higher. Finally, oil remains plentiful as evidenced by a 14.1% y/y rise in inventories of crude oil & petroleum products. Inventories of gasoline recently have firmed by 4.5% y/y and crude oil inventories less the SPR are up by 18.7%. The figures on crude oil production and inventories are available in Haver's OILWKLY database.

Natural gas prices continued their move sideways last week. At an average of $3.44 per mmbtu (-62.8% y/y), the price was down by three-quarters from the high reached in early-July of last year of $13.19/mmbtu.

Weekly Prices 08/17/09 08/10/09 Y/Y 2008 2007 2006
Retail Regular Gasoline ($ per Gallon, Regular) 2.64 2.65 -29.5% 3.25 2.80 2.57
Light Sweet Crude Oil, WTI  ($ per bbl.) 69.65 71.57 -39.1% 100.16 72.25 66.12
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