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Released on September 7, 2006 A Roller Coaster Year In 2005, retail gasoline prices were generally rising through the first 8 months of the year, with August 2005 prices rising sharply. Then, with Hurricane Katrina at the very end of August knocking out oil production platforms in the Gulf of Mexico, refineries along the Gulf Coast, and electricity for pipelines, gasoline prices saw the largest one-week rise ever recorded on EIA’s pump price survey on September 5, 2005. But as crude oil and gasoline flows were partially restored, retail prices began to fall, only to witness another run-up, as Hurricane Rita came ashore in late September 2005. By early December, pump prices had fallen as low as $2.15 per gallon, as by then, oil infrastructure conditions had improved significantly in the face of much lower off-season gasoline demand. However, by later in December 2005, gasoline prices began another long upward trend through much of 2006, although not without occasional interruptions stemming from temporary market softness. More recently, consumers saw retail prices turn downward several weeks early this year, well before the Labor Day end of summer, as the market determined that more than enough supply remained on hand to satisfy demand through the peak season. The average U.S. retail gasoline price for regular gasoline has dropped 31 cents per gallon over the last 4 weeks, from $3.04 per gallon to $2.73 per gallon as of September 4, 2006. Several states already have average gasoline prices below $2.50 per gallon, and some retail stations in Ohio are now selling regular gasoline for under $2.20 per gallon, according to Gasbuddy.com. Based on spot prices of gasoline, it looks like the retail drop will likely continue, at least for the next few weeks, in most regions of the country. But how much further they drop and for how long, will be determined by many factors yet to play out. While the price for West Texas Intermediate crude oil has recently dropped below $68 per barrel, future price developments are highly uncertain. Many of the factors that caused crude oil prices to reach $70 per barrel (lack of spare production capacity, strong global demand growth, concerns about supply disruptions) remain, although some, such as worry over oil infrastructure damage from hurricanes, have been pushed aside, at least temporarily. While consumers can expect that retail gasoline prices will continue to drop over the near-term, prices will rise again somewhere further down the track if the recent roller coaster pattern of gasoline prices continues. U.S. Average Retail Gasoline Price Drops 12 Cents Retail diesel fuel prices fell by 6.0 cents to reach 296.7 cents per gallon as of September 4, still 6.9 cents higher than last year. This is the first time in five weeks that prices have been below the $3 mark. Prices were down throughout the country, with the Midwest seeing the largest regional decrease of 8.9 cents to 293.7 cents per gallon. The Rocky Mountains, which has the highest regional price in the country, saw a decrease of 2.8 cents to 331.8 cents per gallon. West Coast prices fell 3.0 cents to 319.9 cents per gallon. August Build for Propane above Average 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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