Global| Jul 11 2006Gasoline Prices Up With Demand
by:Tom Moeller
|in:Economy in Brief
Summary
Retail gasoline prices rose another four cents last week to an average $2.97 per gallon (27.7% y/y). Demand for motor gasoline was quite strong during June. According to the Oil and Gas Journal's estimates, demand rose 5.6% from the [...]
Retail gasoline prices rose another four cents last week to an average $2.97 per gallon (27.7% y/y).
Demand for motor gasoline was quite strong during June. According to the Oil and Gas Journal's estimates, demand rose 5.6% from the May average and rose 6.5% from June of 2005. The US Dept. of Energy's figures peg demand up as well but to a lesser degree
Yesterday, in spot market trading the price for a gallon of regular unleaded gasoline fell seven cents to $2.13. In 2005 petroleum companies began eliminating MTBE from reformulated gasoline (RFG) and have replaced it with ethanol. The last remaining markets for MTBE RFG are in the final stages of switching to RBOB (Reformulated Blendstock for Oxygenate Blending). As a consequence, prices for RFG in the Haver databases are being discontinued and new regular and premium RBOB prices are being added.
The New York Mercantile Exchange introduced a RBOB futures contract in January and traders are gradually migrating to the new RBOB contracts. RFG contracts will end with the January 2007 contract. While these changes are important, two-thirds of all gasoline consumed in the US is still conventional and not impacted by these changes.
The domestic spot price for a barrel of West Texas Intermediate fell for the third straight day on Monday. Nevertheless, at $73.63 per bbl. the price was nearly 4% higher than last month's average.
What the Fifth District's only major oil refinery explains about high gas prices in the wake of Hurricanes Katrina and Rita from the Federal Reserve Bank of Richmond is available here.
Tom Moeller
AuthorMore in Author Profile »Prior to joining Haver Analytics in 2000, Mr. Moeller worked as the Economist at Chancellor Capital Management from 1985 to 1999. There, he developed comprehensive economic forecasts and interpreted economic data for equity and fixed income portfolio managers. Also at Chancellor, Mr. Moeller worked as an equity analyst and was responsible for researching and rating companies in the economically sensitive automobile and housing industries for investment in Chancellor’s equity portfolio. Prior to joining Chancellor, Mr. Moeller was an Economist at Citibank from 1979 to 1984. He also analyzed pricing behavior in the metals industry for the Council on Wage and Price Stability in Washington, D.C. In 1999, Mr. Moeller received the award for most accurate forecast from the Forecasters' Club of New York. From 1990 to 1992 he was President of the New York Association for Business Economists. Mr. Moeller earned an M.B.A. in Finance from Fordham University, where he graduated in 1987. He holds a Bachelor of Arts in Economics from George Washington University.
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