Released on April 7, 2004
(Next Release on April 14, 2004)

A Broken Record?
Like a broken record that keeps playing the same song over and over again, the national average retail price for regular gasoline climbed another 2.2 cents to $1.78 per gallon on April 5, 2004, adding to a period that saw prices rise by more than 30 cents per gallon since the beginning of the year. Interestingly, conventional wisdom would seem to dictate that rapidly rising prices would have some dampening effect on gasoline consumption. But with preliminary data showing first quarter 2004 gasoline demand reaching an all-time record of nearly 8.8 million barrels per day, high gasoline prices (not adjusted for inflation), at least in the short-term, have not proven to be a deterrent to consumers’ appetite for gasoline. Why is gasoline demand so much stronger this year compared with the same period last year when gasoline prices were about 15 cents per gallon lower? 

A major factor that would help explain the difference is that the U.S. economy is on a much stronger footing than at the same time last year. While the recovery in the U.S. economy has been sluggish and even spotty at times, momentum has been building since the middle of 2003 to a point where many consumers feel more confident that the economy will not fall back into recession. Strong growth in real disposable income, Gross Domestic Product, and lately in employment, compared with year-ago levels, are reflected in the strong rise in demand for gasoline during the first three months of 2004.  Another factor contributing to the rise in gasoline demand this year was the early end to severe winter weather over many areas of the country. Despite a colder-than-normal January, temperatures during February and March 2004 were close to normal, resulting in more favorable driving conditions compared with last year, which saw frequent winter storms and frigid temperatures during most of this same period. To a lesser extent, many consumers may be less sensitive to gasoline prices at these levels, having experienced them off and on again over the last few years. This suggests real prices might have to climb significantly before market resistance sets in to stifle gasoline demand.

While gasoline demand remained strong during the first three months of 2004, demand for other petroleum products was mixed, with distillate fuel oil demand relatively flat at 4.2 million barrels per day from the same period last year, while total jet fuel demand edged  slightly lower by 2.1 percent to average 1.5 million barrels per day during this same period. Rather lackluster demand for distillate fuel oil, including heating oil, can be attributed in part to temperatures that were slightly less than 4 percent above normal on the East Coast (where most of the nation’s heating oil is consumed) during the first three months of 2004, on an oil heating basis, compared with the same period last year that recorded temperatures nearly 6 percent below normal. Surprisingly, jet fuel demand remained relatively weak during the first quarter 2004, compared with last year, despite a stronger economy. Overall petroleum demand during the first quarter 2004 was up about 2.1 percent, averaging nearly 20.5 million barrels per day, compared with the same period last year.

Petroleum Supply Data Changes
The Energy Information Administration (EIA) is making changes to the petroleum supply data that will affect EIA’s weekly and monthly information products. EIA is making these changes as a means of improving its petroleum supply surveys to reflect the changing regulations, products, and industry. Moreover, the EIA also anticipates these changes will contribute to a greater level of transparency within U.S. petroleum markets that will better facilitate the supply and distribution of crude oil and petroleum products.

Changes to petroleum supply monthly data began with collection of data for January 2004, while changes to weekly petroleum supply data began with data for the week ending April 2, 2004. Because monthly petroleum supply surveys collect data at a far greater detail than weekly surveys, release of the new product categories published in the EIA report, Petroleum Supply Monthly (PSM), are expected to be delayed for a period until the data are determined to be complete and accurate. Consequently, beginning with the January 2004 monthly data release, the EIA will publish the same product categories in the same format as were published in 2003. However, changes to product categories in the EIA report, Weekly Petroleum Status Report (WPSR), will begin Wednesday, April 14, 2004.

A sample of some of the major changes, which are nearly identical for both the WPSR and the PSM, include the following:

For a more detailed explanation of these changes and sample Tables, see the link at the top of this page titled: Second Notice Regarding Upcoming Changes to Petroleum Supply Data.

California Sees Large Price Increases in Retail Transportation Fuel Prices
The U.S. average retail price for regular gasoline increased by another 2.2 cents per gallon as of April 5 to 178.0 cents per gallon, 15 cents higher than prices at this time last year. Retail regular gasoline prices were up throughout the country last week, with the West Coast leading the way with a 4.7 cent increase to reach 204.9 cents per gallon. California prices also rose by 4.7 cents to 212.6 cents per gallon, staying over the $2 mark for the seventh week in a row. Prices on the Gulf Coast rose by 3.0 cents, but they remained the lowest region in the nation at 167.1 cents per gallon

Retail diesel fuel prices increased by 0.6 cent per gallon as of April 5 to a national average of 164.8 cents per gallon, which is 9.4 cents per gallon higher than a year ago. Retail diesel prices were mixed last week, with the West Coast seeing the largest regional increase of 6.8 cents to hit 188.5 cents per gallon. California prices jumped 12.5 cents to 201.4 cents per gallon, marking the only time on record that the California average diesel retail price has topped $2.

Propane Inventories Edge Lower Last Week
Most likely reflecting a late season surge in demand following chilly temperatures felt in some areas of the nation, U.S. inventories of propane reported a 0.2-million-barrel stockdraw last week. Accordingly, primary inventories moved lower to end the week of April 2, 2004 at an estimated 27.3 million barrels, a level that remains nearly 5.7 million barrels above the end of March 2003 level. Regional inventories continued mixed last week with a relatively sharp 0.4-million-barrel decline in the Midwest, while at the same time inventories posted similar 0.1-million-barrels gains in both the East Coast and Gulf Coast regions. Moreover, all regional inventories remain within their respective average ranges for this time of year. Propylene non-fuel use inventories ended the week of April 2, 2004 at 1.3 million barrels, down less than 0.1 million barrels from last week that accounts for a 4.9 percent share of total propane/propylene inventories.

Text from the previous editions of “This Week In Petroleum” is now accessible through a link at the top right-hand corner of this page.