Released on July 7, 2005
(Next Release on July 13, 2005)

A More Expensive Vacation Trip
Retail gasoline prices rose again this past week, with EIA reporting a national average price of nearly $2.23 per gallon for regular gasoline as of July 4, 2005. With gasoline prices 33 cents per gallon higher than last year at this time, the car trip to the beach or to the mountains will be more expensive this summer. But how much impact will the increase in gasoline prices have on travel costs this year, and will it be enough to prevent people from taking vacations?

As the table below illustrates, the increase in gasoline prices does not add much to the cost of a typical vacation trip, with the additional cost probably less than a family of four might spend on one fast food meal. This might help explain why the American Automobile Association was expecting record travel over the July 4th weekend, and why gasoline demand set a weekly record with an average of over 9.7 million barrels per day for the week ending July 1st. While gasoline prices are certainly much higher than they were a year ago, the increase does not seem likely to cause many people to cancel their vacation plans.

Nevertheless, while the increased cost of gasoline may not deter many people from taking their vacations, it can substantially add to a car’s expenses over the course of a year. As the chart below illustrates, an increase of 50 cents per gallon for gasoline over the course of a year can add as much as $400 or more to the expense of running just one vehicle. For families with multiple vehicles, the added expense can really add up, if the increased cost is sustained for a year, especially those families with lower household incomes. So, while gasoline prices may not impact people’s vacations much this summer, over time, they will add significantly to expenses and thus cause some people and families to adjust their budgets.

U.S. Average Retail Gasoline and Diesel Prices Both Gain a Penny
The U.S. average retail price for regular gasoline increased this week by 1.1 cents from the previous week to 222.6 cents per gallon as of July 4, 33.1 cents higher than this time last year. This is the fifth week in a row that prices have increased. Prices were up throughout most of the country, with the West Coast seeing the largest regional increase of 3.8 cents to reach 241.1 cents per gallon. East Coast prices rose by 1.5 cents to 221.4 cents per gallon. California prices, the highest in the nation, increased 4.5 cents to 245.7 cents per gallon, which is 25.3 cents higher than this time last year. The Midwest saw the only regional decrease of 0.7 cent to 219.4 cents per gallon.

Retail diesel fuel prices were up 1.2 cents last week to 234.8 cents per gallon, reaching another nominal all-time high. Prices were up regionally throughout the country, with the Rocky Mountains seeing the largest regional increase of 4.0 cents to 232.8 cents per gallon. California prices, the highest in the nation, rose by 3.2 cents to 255.4 cents per gallon, which is 47.8 cents higher than this time last year.

June Propane Build About Average
Strong imports into the Gulf Coast last week propelled inventories of propane up 3.4 million barrels to record the largest weekly gain so far during the 2005 stockbuilding season. With last week’s gain, U.S. inventories stood at an estimated 53.0 million barrels as of July 1, 2005, a level more than 9 million barrels above the same point last year, based on weekly inventory data. Moreover, the stockbuild for the first half of the season totaled about 25.8 million barrels, compared with the most recent 5-year average of about 22.0 million barrels for this same period. While the April 2005 stockbuild was above the 5-year average level, the May and June stockbuilds were more in line with their 5-year average levels for those months. Following recent trends, the weekly build was mostly concentrated in the Midwest and Gulf Coast regions, which reported respective gains of 1.8 million barrels and 1.6 million barrels. East Coast inventories remained unchanged, while the Rocky Mountain/West Coast regions showed a 0.1-million-barrel increase during this same time. Propylene non-fuel use inventories also remained unchanged last week at 5.0 million barrels, dropping to 9.4 percent of total propane/propylene inventories from 10.1 percent from the prior week.

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