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Economy in Brief

U.S. Gasoline Prices Lowest Since February 2007. Demand Fell Further
by Tom Moeller November 11, 2008

The retail price for a gallon of regular gasoline fell by another eighteen cents last week after the twenty six cent drop during the prior week, according to the U.S. Department of Energy survey. The price of $2.22 was the lowest since February 2007. Prices have now fallen $1.89 per gallon, or by nearly one-half, since their peak early this past July. The latest decline was accompanied by a drop in the average price for all grades of gasoline to $2.28 per gallon.

Yesterday, the spot market price for a gallon of regular gasoline fell eight cents from last week's average to $1.40. In futures trading the November contract closed down further at $1.37 per gallon.

Weekly gasoline prices can be found in Haver's WEEKLY database. Daily prices are in the DAILY database.

The demand for gasoline fell by 3.3% y/y, according to the U.S. Department of Energy. The rate of decline has bottomed out recently but the decline is still the fastest since late-1995 (the latest four weeks versus the same four weeks last year). The demand for all petroleum products also has softened, falling 7.0% y/y.

These DOE figures are available in Haver's OILWKLY database.

The price for a barrel of West Texas Intermediate crude oil fell further last week to an average $64.31 per barrel, down 56% since the peak in July of $145.66. In futures trading yesterday, the two-month price for crude oil was even lower at $63.27 per barrel.

Last week, prices for natural gas ticked up w/w to $6.74 per mmbtu (-3.3% y/y) as seasonal factors began to lift the price. The average price this month was nearly one-half below the high for natural gas prices in early-July of $13.19/mmbtu.

If Exchange Rates Are Random Walks, Then Almost Everything We Say About Monetary Policy Is Wrong from the Federal Reserve Bank of Minneapolis can be found here.

Weekly Prices 11/10/08 11/03/08 Y/Y 2007 2006 2005
Retail Regular Gasoline ($ per Gallon) 2.22 2.40 -28.5% 2.80 2.57 2.27
Light Sweet Crude Oil, WTI  ($ per bbl.) 64.31 65.68 -32.5% 72.25 66.12 56.60
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