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Economy in Brief

U.S. Gasoline Prices Reach New Highs With Crude Oil
by Tom Moeller  December 15, 2010

Signs of building momentum behind the U.S. economic recovery has given further support to petroleum prices. The pump price for regular gasoline rose two cents last week to $2.98 per gallon. Prices have risen roughly fifty cents per gallon since the middle of last year and have surged from the December-2008 low of $1.61. Yesterday the spot market price for a gallon of regular gasoline of $2.34 was even with last week's average. Notable about the strength in gasoline costs is that now is when they're supposed to soften. To account for this pattern Haver Analytics calculates seasonal factors. Thus, the higher seasonally adjusted gasoline price of $3.51 per gallon explains why to motorists the "pain" of filling up is most acute.

Crude oil prices rose last week to an average $88.50 for a barrel of light sweet crude (WTI). Yesterday, the crude price held roughly steady at $88.61 per barrel. Here again, normal seasonal patterns suggest that crude costs should now be under downward pressure. The seasonally adjusted cost of a barrel of crude oil is $102.16 per barrel as calculated by Haver Analytics.

Lastly, natural gas prices built on earlier seasonal improvement and rose last week to an average of $4.45 per mmbtu versus an average $3.70 in November. Yesterday, prices nudged higher to $4.46 but remained down from an early-January high of $6.50.

Demand for gasoline fell 0.7% in early-December versus last year. The demand for residual fuel oil fell a greatly lessened 5.0% but distillate demand rose 5.3% y/y. Inventories of crude oil and petroleum products rose 0.8% 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

The statement following today's FOMC meeting can be found here.

Weekly Prices 12/13/10 12/06/10 11/29/10 Y/Y% 2009 2008 2007
Retail Regular Gasoline ($ per Gallon, Regular) 2.98 2.96 2.86 14.7 2.35 3.25 2.80
Light Sweet Crude Oil, WTI($ per bbl.) 88.50 86.36 81.92 23.7 61.39 100.16 72.25
Natural Gas($/mmbtu) 4.45 4.20 3.99 -12.7 3.95 8.88 6.97
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