The Summer Outlook for Transportation Fuel Markets (Video)

On April 12, the U.S. Energy Information Administration (EIA) released the April 2011 Short-Term Energy and Summer Fuels Outlook that includes a detailed look at the forecast for transportation fuels during the upcoming summer (April through September).

Regular-grade gasoline retail prices, which averaged $2.76 per gallon last summer, are projected to average $3.86 per gallon during the 2011 driving season. The monthly average gasoline price is expected to peak at about $3.91 per gallon by mid-summer. Diesel fuel prices, which averaged $2.98 per gallon last summer, are projected to average $4.09 per gallon this summer. Weekly and daily national average prices can differ significantly from monthly and seasonal averages, and there are also significant differences across regions, with monthly average prices in some areas exceeding the national average price by 25 cents per gallon or more.

Because taxes and retail distribution costs are generally stable, movements in gasoline and diesel prices are driven primarily by changes in crude oil prices and wholesale margins. The retail price projections in the Outlook reflect higher prices for the refiner acquisition cost of crude oil, which averages about $112 per barrel ($2.67 per gallon) this summer compared with the $75 per barrel ($1.78 per gallon) average of last summer.

EIA expects wholesale gasoline margins (the difference between the wholesale price of gasoline and the refiner acquisition cost of crude oil) will average 53 cents per gallon this summer, up 18 cents per gallon from last summer and slightly higher than the previous 5-year average of 50 cents per gallon. Similarly, forecast wholesale diesel margins are higher this summer (60 cents per gallon) than last summer (40 cents per gallon).

EIA projects gasoline consumption will average about 9.3 million barrels per day (bbl/d) over the summer, an increase of 45,000 bbl/d (0.5 percent) over last summer. Population growth and a recovering economy contribute to gasoline consumption growth, while higher gasoline prices and the increase in the Corporate Average Fuel Economy (CAFE) tend to moderate it. At the onset of the summer driving season, total motor gasoline stocks, at an estimated 215.7 million barrels, are 8 million barrels below the level of a year-ago, but 1 million barrels above the most recent 5-year average (2006-2010).

Retail Gasoline and Diesel Prices Surge
The U.S. average retail price of regular gasoline surged this week, adding almost 11 cents versus last week. At $3.79 per gallon, gasoline is priced $0.93 per gallon higher than last year at this time; it is the highest price in April since EIA began tracking weekly data in 1990. For the second consecutive week, the biggest increase in the country was in the Midwest, where gasoline added more than 12 cents per gallon. On the Gulf Coast, gasoline prices jumped an even 12 cents per gallon. The East Coast saw its average gasoline price gain a dime. The West Coast average increased more than eight cents to $4.04 per gallon, the first time any major region has eclipsed $4 per gallon since August 11, 2008. Rounding out the regions, gasoline in the Rocky Mountains was about seven cents higher this week and remains the least expensive in the country at $3.57 per gallon.

Diesel prices added 10 cents this week to hit $4.08 per gallon. This is the first time the national average diesel price has been above $4 per gallon since September 2008. Diesel is $1.01 per gallon higher than last year at this time. Midwest diesel prices were up almost 11 cents per gallon, which was the biggest regional price increase in the Nation. East Coast diesel prices also saw a double-digit gain of 10 cent s per gallon. The West Coast and Gulf Coast both saw increases just under 10 cents per gallon. The Rocky Mountain region marked its 20th consecutive weekly increase by adding eight cents to last week’s average price.

Looking to learn more? Watch this March video from the fine folks at Mahalo, back when prices were a little lower. Ahh, those were the days.