Released on September 11, 2002
(Next Release on September 18, 2002)

A Record Breaking Summer
As the Labor Day holiday marks the end of the summer driving season, it's now apparent that motorists took to the highways in large numbers as evidenced by the record level of gasoline demand reported during the peak consumption period. Based on monthly figures for June and preliminary weekly data for July and August, gasoline demand totaled a record 9.1 million barrels per day during the summer driving season, including the highest level for any month during June with 9.2 million barrels per day. Moreover, gasoline demand set records for each of the first eight months of 2002.

While gasoline demand, and other petroleum products as well, have shown a pattern of continued growth over the years, it would be reasonable to assume that record gasoline demand levels would be reached on a regular basis over time. In fact, over the past 20 summer driving seasons, gasoline demand set 15 records as demand rose from 6.9 million barrels per day during 1983 to 9.1 million barrels per day during 2002. But the record 2002 summer drive season was to some extent dissimilar to prior year driving seasons for several reasons. The lingering effects of September 11th caused a noticeable shift in consumer preferences for automobile travel over air travel, especially for shorter trips of fewer than 200 miles (see text from the August 21, 2002 issue of "This Week In Petroleum"). In addition, record gasoline imports during the summer created an inventory cushion that provided more than adequate gasoline supplies during the peak summer driving season. Lastly, remarkably stable gasoline prices offered consumers a respite from past driving seasons that were routinely plagued with holiday price spikes and/or elevated prices stemming from infrastructure problems, such as occasional refinery outages. Between Memorial Day and Labor Day holidays, total retail gasoline prices fluctuated by only 3.2 cents per gallon. This compares with the nearly 33 cents per gallon range during the same period last year and the nearly 17 cents per gallon range that was averaged over the previous 5 years.

The exceptionally strong 2002 driving season posted the fourth highest year-over-year percentage increase in gasoline demand (June through August) of the past 20 years. But even at these levels, gasoline demand may still be understated if the current trend of upward revisions to weekly data holds when monthly data for July and August become available. Nevertheless, current data show finished gasoline imports during the 2002 summer driving season averaged 547 thousand barrels per day, a record that was 40 percent above the volume averaged over the previous 5 years. Refinery production also posted a record during this same period at 8.6 million barrels per day, a level that was 4 percent above the 5-year average, despite average operating levels, i.e., crude oil inputs to refineries. But not every gasoline supply/demand component set a record during the 2002 summer driving season. With record imports and production providing for most of the incremental supplies of gasoline, the need for additional supplies from inventories were significantly lessened compared with prior years. The draw on summer time gasoline inventories measured 13.3 million barrels, 20 percent below the 5-year average of 16.7 million barrels. And of course, in the most important category for consumers, the 2002 driving season was notable for not setting a record for retail gasoline prices.

Retail Gasoline and Diesel Fuel Prices
The U.S. average retail price for regular gasoline remained relatively flat from a week ago, increasing by 0.1 cent per gallon as of September 9 to reach 139.5 cents per gallon. This price is 13.2 cents per gallon lower than last year, continuing a trend that has held for most of the summer. Retail diesel fuel prices increased for the fourth week in a row, rising by 0.8 cent per gallon to a national average of 139.6 cents per gallon as of September 9. This is the first time since March 4 in which the average retail diesel price was higher than the average retail regular gasoline price, signaling an end to the gasoline season. In recent years, diesel prices have been higher in the fall and winter, as harvesting and colder weather put increased pressure on diesel and heating oil prices. Retail diesel prices were up throughout the country, with the largest price increase occurring in the West Coast region, where prices rose by 4.2 cents to end at 154.8 cents per gallon. U.S. diesel fuel prices have shot up 9.3 cents since August 12, with prices along the West Coast increasing by 14.3 cents over that same time period.

August Propane Stockbuild Below Average
U.S. inventories of propane increased by 4.7 million barrels during August 2002, but the stockbuild fell short of reaching the 5-year monthly average of 5.3 million barrels. Nevertheless, U.S. inventories of propane, at 69.7 million barrels as of August 31, 2002, continues to run slightly above the upper limit of the average range for this time of year. Regional inventories were higher last month in the Midwest with a 2.7 million barrel gain, followed with a 1.5 million barrel increase in the Gulf Coast region. East Coast inventories managed a nearly 0.2 million-barrel increase during this same period. While East Coast inventories continued above the average range last month, the above average stockbuild in the Midwest pushed inventories slightly higher within the average range. Gulf Coast inventories remain well above the average range despite the less than average stockbuild in the region during August.

Next Propane Inventory Release
Propane inventory data for September 30, 2002, will be published in the October 9, 2002 issue of "This Week In Petroleum."