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This Week In Petroleum EIA Home > Petroleum > This Week In Petroleum |
Released on December 22, 2004
(Next Release on December 29, 2004)
Home for the Holidays
As many Americans take to the roads to be with friends and family this holiday season, they will receive an extra present in the form of lower gasoline prices. At $1.815 per gallon on Monday, December 20, 2004, the average price of a gallon of regular gasoline had dropped to its lowest level since April 26, below levels experienced by travelers during Memorial Day, July 4th, Labor Day, and Thanksgiving, not to mention Columbus Day.
Yet, the national average gasoline price is still 33 cents per gallon higher than last year, which matches exactly the increase in crude oil prices over this time period. Crude oil prices yesterday were nearly $14 per barrel (or 33 cents per gallon) higher than a year ago for a number of reasons, most of which do not appear likely to dissipate in the near-term. Capacity constraints across the oil sector (upstream, downstream, pipelines, and tankers) have limited the industry's flexibility in responding to high prices. With little spare production capacity available worldwide, periodic disruptions in supply (in Iraq, Nigeria, and from hurricane activity in the Gulf of Mexico) have impacted oil markets more than they would have otherwise. In addition, the mismatch between demand for lighter products and the heavier crude being made available has also reduced the efficiency of the refining industry. Finally, tight transportation capacity, both for tankers as well as some product pipelines (e.g., the Colonial Pipeline has recently been running at full capacity and has been forced to allocate volumes across suppliers), have kept crude oil and refined products from being shipped from source to destination as efficiently as possible, thus adding to the cost of crude oil and refined products. On top of the capacity constraints mentioned above, tight inventory levels, particularly earlier in the year, and strong demand for oil products across the globe, especially in China and the United States, have been major factors in the increase in oil prices this year.
So, will travelers see even lower gasoline prices on their return trip or are prices likely to increase over the next week or so? Of course, this is dependent on what wholesale prices do over the next several days, but as of this writing, it appears that gasoline prices are unlikely to rise significantly over the next week or two, with a reasonable chance of declining even further as we move into 2005. Nevertheless, even if gasoline prices continue to decline into the early part of next year, EIA still expects them to run at higher average levels in 2005 than those seen in 2004, especially if crude oil prices remain above $40 per barrel throughout the year. Continued growth in gasoline demand is likely to keep pressure on gasoline prices as we approach the peak driving season later in 2005.
Retail Gasoline and Diesel Fuel Prices Dip Again
The U.S. average retail price for regular gasoline decreased this week by 3.2 cents per gallon from the previous week to reach 181.5 cents per gallon as of December 20, 33.0 cents higher than this time last year. This is the seventh week in a row, and the eighth time in nine weeks, that prices have dropped. Prices were down throughout all of the country, with the West Coast region seeing the largest decrease of 7.3 cents to 199.3 cents per gallon. This is the first time since February 23 that West Coast prices have been below the $2.00 mark. Retail prices on the East Coast fell 3.5 cents to 184.6 cents per gallon, which is 35.5 cents higher than last year. Prices in California fell 8.6 cents to 204.9 cents per gallon, which is 43.4 cents higher than this time last year.
Retail diesel fuel prices were down 1.3 cents to 198.4 cents per gallon. This is the lowest retail price since September 20. Prices were down throughout most of the country, with the West Coast seeing a decrease of 5.0 cents to 204.7 cents per gallon, while California prices fell 5.1 cents to 208.7 cents per gallon. The Rocky Mountain region saw the largest one-week decrease of 6.1 cents to hit 198.8 cents per gallon. The Gulf Coast was the only region that saw an increase, with prices rising 1.2 cents to 192.2 cents per gallon. Prices in New England stayed the highest in the nation, falling just 0.7 cent to hover at 219.9 cents per gallon.
Residential Heating Oil Prices Increase
Residential heating oil prices increased for the period ending December 20, 2004. The average residential heating oil price increased by 4.9 cents from last week to reach 199.6 cents per gallon, an increase of 50.7 cents from this time last year. Wholesale heating oil prices increased 21.4 cents to reach 145.4 cents per gallon, an increase of 51.2 cents compared to the same period last year.
The average residential propane price increased 0.4 cent, from 171.3 cents to 171.7 cents per gallon. This was an increase of 30.3 cents over the 141.4 cents per gallon average for this same time last year. Wholesale propane prices increased 7.1 cents per gallon, from 85.5 to 92.6 cents per gallon, a gain of 19.3 cents compared to the same period last year.
Propane Inventories Fall on Frigid Temperatures
The first round of frigid temperatures this season contributed to the 2.7-million-barrel drop in U.S. inventories of propane last week that left inventories as of December 17, 2004 at an estimated 58.8 million barrels. As of about mid-month, primary stockholders have drawn down inventories by about 4.9 million barrels, a level that is on track to fall below the 11.3-million-barrel draw averaged over the most recent 5-year period. Over this period, propane inventory withdrawals have ranged from a low of 4.5 million barrels during December 2001, to a high of nearly 18.7 million barrels during the same month in 2000. Nevertheless, the nation's primary supply of propane continues at a level on the upper boundary of the normal range for this time of year.
Regional draws were consistent across all regions with declines in the Gulf Coast measuring 1.5 million barrels, followed with a Midwest stockdraw that totaled 0.5 million barrels. Stock draws in the East Coast and the combined Rocky Mountain/West Coast regions reported similar 0.4-million-barrel declines during this same time. Propylene non-fuel use inventories moved lower by 1.0 million barrels last week to 2.4 million barrels, a level accounting for 4.1 percent 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.
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-3.2
33.0
