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Economy in Brief

Weekly Chain Store Sales LikelySuffered From Price Discounting
by Tom Moeller January 12, 2010

Energy prices are responding to evidence of economic recovery. Last week the pump price for regular gasoline rose to $2.75 per gallon, the highest level since October 2008 and up 71% from the December 2008 low of $1.61. Yesterday, strength in gasoline prices eased somewhat. The spot market price for a gallon of regular gasoline held at $2.12 per gallon, the same as last week's level. The figures are reported by the U.S. Department of Energy and can be found in Haver's WEEKLY & DAILY databases.

Earlier gains in the price for a barrel of light sweet crude (WTI) oil also stabilized. Yesterday, the spot price of $82.52 was roughly unchanged from the prior week. Nevertheless, prices have risen from $71.53 averaged in early-December. Moreover, prices were up sharply from the December 2008 low of $32.37.

Demand for gasoline last week posted a 0.9% decline versus one year ago. That decline compared to a 3.9% increase at the beginning of October. Breaking away from earlier y/y strength, the demand for residual fuel oil fell a sharp 50.4% y/y while distillate demand fell 10.9% y/y, a decline more moderate than the 21.6% y/y shortfall at the beginning of last July. Inventories of crude oil and petroleum products fell in early-January by 6.2% from the July high and were up a diminished 3.1% from one year ago.

Reflecting the cold temperatures throughout the U.S. natural gas prices also strengthened significantly. Last week prices averaged $6.50 per mmbtu (11.1% y/y), up from $3.35 in November and triple the September low. Nevertheless, prices remained down by half from the high reached in early-July of 2008 of $13.19/mmbtu.

The energy price data can be found in Haver's WEEKLY database while the daily figures are in DAILY. The gasoline demand figures are in OILWKLY.

The Case for "Inflation First" Monetary Policy from the Federal Reserve Bank of St. Louis is available here 

Weekly Prices 01/11/10 01/04/10 12/28/09 Y/Y 2008 2007 2006
Retail Regular Gasoline ($ per Gallon, Regular) 2.75 2.67 2.61 54.2% 3.25 2.80 2.57
Light Sweet Crude Oil, WTI  ($ per bbl.) 82.59 79.14 75.09 85.6% 100.16 72.25 66.12
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