After the dramatic spike and then drop in gasoline prices in 2008, retail gasoline prices bottomed out in late December, and have been generally increasing since then.

EIA analysis of the petroleum market points to the following as main contributors to the increases in retail gasoline prices since the start of 2009:

• The cost of crude oil to refiners — Spot prices for crude oil bottomed out at the end of December 2008 at around $30 per barrel, and then increased to, and have fluctuated around, $40 per barrel since then.
  
  

• The balance between gasoline supply and demand — Gasoline production and inventories have tightened relative to demand, putting additional upward pressure on prices as refiners seek to improve their margins on gasoline.

This Week In Petroleum often discusses gasoline prices.

• The February 25, 2009 edition discusses recent crude oil and gasoline prices in detail.
• The February 04, 2009 edition discusses recent fluctuations gasoline prices in detail.

For EIA's latest gasoline price forecast, see EIA's Short-Term Energy Outlook

U.S. households are projected to spend an average of $987 per household, for heating this winter, a decrease of about 0.4% over last winter. Households using heating oil and propane are projected to spend less for heating than last winter, while those heating with natural gas and electricity may spend more than last year.

Forecasts (as of February 10, 2009) for average winter heating expenditures and the percent change over last winter, for households heating with:

• Natural gas – $870 per household, 1.4% increase
• Heating oil – $1,606 per household, 17.8% decrease
• Propane – $1,586 per household, 5.6% decrease
• Electricity – $932 per household, 8.3% increase    

Projected heating costs this winter–residential heating fuel prices by region (PDF)

How do I compare heating fuels?

Last updated: February 10, 2009

The cost of crude oil is a major component in the price of diesel fuel, gasoline, and heating oil. But there are other factors that affect retail fuel prices. Prices are determined by demand and supply in our market economy.  Fuel demand is affected mainly by economic conditions, and for heating oil, the weather.  Supplies come from refinery production, imports, and stocks (inventories.)

Suppliers price their products based on actual and expected demand relative to available and expected supplies over the short and longer term.  Since stocks are the main buffer between short term demand and supply, stock levels are a major factor in fuel pricing.

Reductions in fuel supply, especially when demand is high, can cause prices to increase and to remain high even if crude oil prices drop.  On the other hand, even if crude oil prices are increasing, retail fuel prices may not increase as much, or may even fall, if existing and expected fuel supplies are high relative to demand.  The rise and fall of crude oil and gasoline prices over the past year help to illustrate these points:

• Retail gasoline prices increased an average of 82 cents per gallon more in the first 7 months of 2008 than in the same period in 2007, while crude oil prices increased by 119 cents per gallon.  Adequate supplies and slowing demand for gasoline meant that much of the crude oil price increases were not passed on at the pump.
• High prices caused people to buy less gasoline, and gasoline and crude oil prices began falling in mid-July.
• In September, Hurricanes Ike and Gustav caused several Gulf Coast refineries and a major gasoline pipeline supplying the Eastern U.S. to shut down. These significant supply disruptions drove gasoline prices up in many areas of the country for several weeks, even as world crude oil prices were dropping. 
• As of mid-October, the supply situation improved and gasoline prices began falling along with oil prices.

EIA offers brochures on gasoline, diesel fuel, and heating oil prices and a detailed primer on oil markets and prices.

Last updated: November 7, 2008

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