Slide 22 of 30
Notes:
- Not surprisingly, our gasoline price forecast stays high with crude oil prices. While this forecast looks very smooth, we believe there is a substantial risk of volatility.
- Gasoline pump prices have backed down from the high prices experienced last summer and fall. The retail price for regular motor gasoline fell 11 cents per gallon from September to December.
- However, with crude oil prices rebounding somewhat from their December lows combined with lower than normal stock levels, we project that prices at the pump will rise modestly as the 2001 driving season begins this spring. For the summer of 2001, we expect only a little difference from the average price of $1.50 per gallon seen during the previous driving season.
- As the earlier retail price graph showed, regional price volatility around this base case can be substantial. The situation of relatively low inventories for gasoline could set the stage for some regional imbalances in supply that could once again bring about significant price volatility in the U.S. gasoline market. The Midwest inventories are especially low, and with the loss of the Blue Island refinery, create extra regional pressures.
- Production is not expected to be much higher than last summer, and demand is expected to be higher, increasing upward price pressure.
- But, high margins could bring in higher than typical imports.
