Released on April 15, 2004
(Next Release on April 21, 2004)

A Crystal Ball
On April 8, EIA released its April 2004 Short-Term Energy Outlook, which highlighted EIA's motor gasoline outlook for the upcoming summer. Of course, what most people were interested in was the forecast for gasoline prices this upcoming driving season. Although EIA does not possess a crystal ball that will tell us exactly what will happen in the upcoming months, factors are in place that lead us to expect retail regular gasoline prices averaging $1.76 per gallon this April through September, up 20 cents from last summer's average. Some months could see average prices at or above $1.80 per gallon. Some of the factors behind this forecast include:

Expectations of high and volatile crude oil prices;

Expectations of low motor gasoline stock levels for much of the summer, maintaining a need for high levels of domestic production and imports to meet demand;

Additional transportation and blending costs related to the substitution of ethanol for MTBE in certain markets and the reduction in permissible sulfur content mandated by the Environmental Protection Agency.

Of course, many things could happen this summer that could lead to lower or higher prices than those forecasted for this summer, both for crude oil and gasoline. But without knowing how the summer will play out, EIA does expect gasoline markets to remain tight this summer, which would lead to relatively high and volatile prices.

Special Announcement Regarding the Data for the Week Ending April 9, 2004
Beginning with data collected for the week ending April 9, 2004 there are significant changes in the product categories for finished motor gasoline, motor gasoline blending components, distillate fuel oil, and propane. Since this is the first week that survey respondents have reported the new product categories, there is little historical information from which to validate the data. Hence, EIA is withholding release of most of the new product categories until we are confident the data are being reported correctly. Data for the aggregated categories, such as total motor gasoline inventories and total distillate fuel oil inventories, should be relatively unaffected, as historical data for these categories exist to help in validating these data items.

Retail Gasoline Prices Continue to Edge Upwards, West Coast Diesel Tops $2
The U.S. average retail price for regular gasoline increased by another 0.6 cent per gallon as of April 12 to 178.6 cents per gallon, 19.1 cents higher than prices at this time last year. Regionally, retail regular gasoline prices were mixed last week, with the East Coast and the Gulf Coast seeing declines under a penny, reaching 174.0 cents per gallon and 166.3 cents per gallon, respectively. Prices in California and on the West Coast stayed strong, with California prices rising by 3.1 cents to 215.7 cents per gallon, staying over the $2 per gallon mark for the eighth week in a row. Prices on the West Coast rose by 3.0 cents, to hit 207.9 cents per gallon, which is 11.2 cents higher than this time last year.

Retail diesel fuel prices increased by 3.1 cents per gallon as of April 12 to a national average of 167.9 cents per gallon, which is 14.0 cents per gallon higher than a year ago. Retail diesel prices were mostly up last week, with the West Coast seeing the largest regional increase of 14.1 cents to hit 202.6 cents per gallon, the first time this price has ever been over $2 per gallon. California prices jumped 14.8 cents to 216.2 cents per gallon, marking a new high (unadjusted for inflation) and the second week California average diesel retail prices have topped $2 per gallon. This substantial increase is largely attributed to three California refineries that have experienced some problems in the last few weeks, thus reducing the amount of diesel fuel available in California and along the West Coast.

Propane Inventories Slightly Higher
Primary stockholders added a relatively modest 0.3 million barrels to U.S. inventories of propane that positioned inventories at an estimated 27.6 million barrels by April 9, 2004. This follows last week's modest decline that is typical this time of year when inventories can waffle between modest gains and losses prior to the major buildup in inventories that generally occurs during the late spring and summer months. Inventory declines in the East Coast and Midwest were more than offset by inventory gains in the Gulf Coast and other regions west of the Rockies. All major regions maintained levels that continued within their respective average ranges last week. Propylene non-fuel use inventories climbed by 0.2 million barrels to reach 1.6 million barrels as of April 9, a gain that accounts for a 5.8 percent share of total propane/propylene inventories.

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