Released on December 23, 2009
(Next Release on December 30, 2009)

Retail Gasoline Prices Drift Lower at Year-End

As the end of 2009 approaches, retail gasoline prices sit squarely in the middle of their 5-year range, having slowly declined over the last two months. The U.S. average retail price for regular gasoline fell to $2.59 per gallon as of December 21, 2009, a drop of more than 10 cents from the year’s high of $2.69 per gallon seen on November 2. Although the average gasoline price is currently 94 cents higher than a year ago (when prices had fallen to their lowest level in nearly 4 years), it is slightly below the average of $2.65 per gallon over the 2005-2009 period.

Overall, gasoline prices in the second half of 2009 have been relatively steady in comparison to recent years. After the roller-coaster ride of 2008, which saw a high of $4.11 per gallon, and a low of $1.61, this year has been comparatively calm. Gasoline prices in 2009 rose more than $1 per gallon from early January to late June, but since then have stayed between $2.46 and $2.69, a range of only 23 cents.

Although the volatility of gasoline prices in recent years has made it hard to define a “typical” pattern, this year’s fourth quarter price path is not unusual. The fourth and first quarters of the year are the weakest for gasoline demand, though there is typically an uptick in consumption around year-end, fueled by holiday travel. Gasoline prices will generally follow this pattern, though the trend may be offset or amplified by changes in underlying world oil markets. This year, crude oil prices fell sharply in the first half of December, with light sweet crude oil futures prices on the New York Mercantile Exchange (NYMEX) dropping nearly $9 per barrel from $78.37 (12/1) to $69.51 (12/14), but prices have since moved back upward to over $74 per barrel.

As U.S. travelers head out on the road for the holidays, retail gasoline prices remain in decline, if only slowly. How much lower they might go is uncertain, but without a significant shift in current market conditions, we would not be surprised by a weekly average price near $2.50 per gallon sometime this winter.

Gasoline and Diesel Fuel Prices Decrease
Following the second consecutive week of reduced prices, the U.S. average retail price for regular gasoline totaled $2.59 per gallon as of December 21, 2009, one cent lower than last week but 94 cents above a year ago. All regional prices decreased except for the Midwest where prices advanced almost a cent to $2.52 per gallon. The East Coast was lower by 2 cents to $2.59 per gallon. The Gulf Coast weakened 3 cents to $2.44 per gallon, the lowest regional price. The largest drop occurred in the Rocky Mountain region where a 3.4-cent reduction sent the price to $2.50 per gallon. The West Coast continued as the highest regional price, dwindling a fraction of a cent to stay at $2.85 per gallon. The average price for regular grade in California moved slightly higher to $2.91 per gallon, a cent over last week and $1.11 per gallon more than last year.

The retail diesel fuel price declined for the seventh straight week, falling 2 cents to $2.73 per gallon, but still 36 cents higher than last year. Regional prices were down across the country with the East Coast decreasing 3 cents to $2.74 per gallon. The Midwest logged the smallest decline, a cent, to dip to $2.71 per gallon. The Gulf Coast price was reduced by 2 cents to total $2.68 per gallon. The Rocky Mountain region eased 4 cents to $2.74 per gallon. The West Coast price fell 3 cents to $2.83 per gallon. California prices slipped 2 cents to fall to $2.89 per gallon.

Propane Stocks Draw Again
Total U.S. inventories of propane continued to decline last week, falling 3.4 million barrels to 54 million barrels. The Gulf Coast region drew 2.1 million barrels of propane stocks and the Midwest region declined 1.2 million barrels. The East Coast stocks dropped by 0.3 million barrels and the Rocky Mountain/West Coast region gained slightly. Propylene non-fuel use inventories increased their share of total propane/propylene stocks from 4.2 percent to 5.0 percent.

Residential Heating Oil Prices Increase
Residential heating oil prices rose during the week ending December 21, 2009. The average residential heating oil price increased 0.6 cent per gallon to reach 275.4 cents per gallon, which was 34.5 cents per gallon higher than the same time last year. Wholesale heating oil prices gained 5.3 cents per gallon to reach 202.3 cents per gallon, 53.1 cents per gallon higher than at this time last year.

The average residential propane price increased 4.8 cents per gallon to reach 240.3 cents per gallon. This was an increase of 7.3 cents per gallon compared to the same period last year. Wholesale propane prices increased 6.2 cents per gallon to reach 131.0 cents per gallon. This was an increase of 45.7 cents per gallon when compared to the December 22, 2008 price of 85.3 cents per gallon.

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.