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Economy in Brief

U.S. Gasoline Prices Slip But They Should Be Weaker
by Tom Moeller   November 24, 2010

It may just be a temporary respite, but the pump price for regular gasoline eased last week to $2.88 per gallon, off a penny from the prior week. Nevertheless, prices have risen six cents this month after last month's ten cent gain. They remain up from the late-2009 level of $2.61 and from the December-2008 low of $1.61. Yesterday the spot market price for a gallon of regular gasoline of $2.23 was down from $2.28 averaged last week.

Normally, prices are weak now versus mid-year and Haver Analytics calculates seasonal factors which adjust for this behavior; the seasonals currently are boosting the price above that at the pump. Consequently, the seasonally adjusted gasoline pump price reached $3.21 per gallon last week. That's up sharply versus a low of $2.40 in early-July. 

Crude oil prices follow the same seasonal pattern. Last week they eased to an average $82.20 for a barrel of light sweet crude oil (WTI) from the high of 86.86. Yesterday, the crude price remained down at $81.74 per barrel. Here again, however, normal seasonality suggests even weaker prices now. Therefore, adjusted crude oil price rose to $87.34 last week from $78.80 in October. 

Lastly, natural gas prices improved last week to an average of $3.72 per mmbtu versus an average $3.49 in October. Yesterday, prices rose further to $3.932 but remained down from an early-January high of $6.50.

Demand for gasoline recently improved despite the weak economy and higher prices. It rose 1.8% in early-November versus last year after declines during October. The demand for residual fuel oil fell roughly one-quarter versus last year but distillate demand rose 13.9% y/y. Inventories of crude oil and petroleum products were rising until recently, but remain up 1.2% during the last twelve months.

The energy price data are reported by the U.S. Department of Energy and can be found in Haver's WEEKLY database. The daily figures are in DAILY and the gasoline demand figures are in OILWKLY.

Weekly Prices 11/22/10 11/15/10 11/08/10 Y/Y% 2009 2008 2007
Retail Regular Gasoline ($ per Gallon, Regular) 2.88 2.89 2.87 9.0 2.35 3.25 2.80
Light Sweet Crude Oil, WTI($ per bbl.) 82.20 86.86 84.79 4.9 61.39 100.16 72.25
Natural Gas ($/mmbtu) 3.72 3.77 3.42 11.0 3.95 8.88 6.97
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