|
What Season Is It?
People living in the eastern and northern parts of the country might be
forgiven if they thought it was still winter, given the cold
temperatures experienced so far this month. But if you were filling up
your car at a gas station recently, you might think it was the middle of
summer, given how high gasoline prices are right now. With everyone
naturally wondering what might be in store for the future, a look at
recent data can provide some important context.
Looking back to the beginning of this
decade, there have been numerous instances when the U.S. average retail
price for regular gasoline was actually lower around Memorial Day or
July 4 than it was in mid-April. The table below shows that in the seven
years so far this decade, the average retail price fell between
mid-April and Memorial Day three years, and in four of the seven years
it was lower around July 4 than it was in mid-April. Given that prices
have risen much more than they typically do during the first part of
this year (see the March 14 edition of
This Week in Petroleum), it wouldn’t be too surprising to
see prices began to stabilize or decline over the next several weeks.
High prices encourage increases in
supply, which eventually lead to falling prices. Of course, it is
impossible to know with 100 percent certainty when prices will
eventually turn and head lower. Our analysis of recent movements in spot
prices and gasoline supplies indicate that when our weekly survey on
prices is released next Monday, it will likely show prices very close to
those seen this past Monday or possibly somewhat lower. Whether any
price decline observed over the next few weeks continues for a
substantial period will depend on whether increases in domestic
production of gasoline and increased imports are sustained. EIA’s
Short-Term Energy Outlook, released on April 10 forecast a
monthly average peak for retail prices of $2.87 per gallon occurring in
May. While prices as of Monday, April 16 are actually already at that
level, it should be noted that the monthly average for April is still
considerably less, with the first three weeks averaging just under $2.80
per gallon. Thus, on this basis, the average retail price remains below
EIA’s peak price forecasted for this summer.
Predicting the timing of retail price
movements is even harder than predicting monthly averages. There will
inevitably be a lot of weekly fluctuations. But unless spot prices rise
again soon, we may be close to seeing the first downward movement in the
average retail price for regular gasoline this spring. Yes, Virginia
(and all other states as well), it is spring right now, no matter what
the thermometer reads.
Retail Gasoline and Diesel Prices Increase Again
For the eleventh consecutive week, gasoline prices increased, climbing
7.4 cents to 287.6 cents per gallon for the week of April 16, 2007.
Prices are now 9.3 cents per gallon higher than at this time last year.
All regions reported higher prices. East Coast prices were up 8.4 cents
to 283.9 cents per gallon. The Midwest saw prices rise 6.3 cents to
280.7 cents per gallon. The largest regional increase was in the Gulf
Coast, with prices up 8.8 cents to 276.3 cents per gallon. Rocky
Mountain prices increased 8.2 cents to 280.1 cents per gallon. West
Coast prices were up 5.7 cents to 319.5 cents per gallon, with the
average price for regular grade in California up 5.3 cents to 330.5
cents per gallon, 40.9 cents per gallon above last year's price.
Retail diesel prices were also up this
week, rising 3.7 cents to 287.7 cents per gallon. Prices are now 11.2
cents per gallon higher than at this time last year. All regions
reported price increases. The East Coast saw the largest increase, with
prices rising 4.9 cents to 286.2 cents per gallon. In the Midwest,
prices were up 2.9 cents to 286.4 cents per gallon, while the Gulf Coast
saw an increase of 3.9 cents to 284.9 cents per gallon. Rocky Mountain
prices were up 3.0 cents to 298.1 cents per gallon. Prices on the West
Coast saw an increase of 3.5 cents to 295.6 cents per gallon. California
prices rose 3.7 cents to 301.5 cents per gallon, 8.2 cents per gallon
higher than at this time last year.
Propane Inventories Edge Higher
Following on the heels of the first post-winter season build, propane
stockholders continued replenishing inventories last week with a modest
0.2-million-barrel build that moved inventories up slightly to an
estimated 26.0 million barrels as of April 13, 2007. East Coast
inventories reported the only stockdraw last week, measuring 0.1 million
barrels, most likely in response to the severe late winter storm that
pummeled the region during this same period. Elsewhere, propane
inventories gained 0.2 million barrels in the Midwest and 0.1 million
barrels in the Gulf Coast, while they remained relatively unchanged in
the combined Rocky Mountain/West Coast regions last week. Propylene
non-fuel use inventories continued to account for a smaller share of
total propane/propylene inventories following last week’s drop of 0.1
million barrels that put this fuel’s share at 8.9 percent, down from the
prior week’s 9.1 percent share. |
