what usually happens when American Petroleum Industry (API) and Department of Energy (DOE) inventory reports show draws for both gasoline and diesel.
The average price for unleaded gasoline (NYSE:UGA) in the US is $3.982 per gallon today and may touch $4 by this Friday. But the demand for gasoline is down with numbers from March showing a steep decline showing the effects of the ever increasing gasoline prices.
The AAA Fuel Gauge report on May 4, 2011 showed the following fuel prices:
The national price for unleaded regular gasoline may peek at $4 per gallon with California currently at $4.265 and the State of Washington at $4.018 staying about the same by the end of this week.
The news of Osama Bin Laden’s death on the night of Sunday, May 1 gave the country great relief and a chance to celebrate in spite of our economical situation. The dollar stayed weak but prices for both West Texas Intermediate and Brent crude oil went down, which caused wholesale gasoline prices to go down 10 cents per gallon since Monday.
The world woke up Monday morning with a new attitude and oil (NYSE:DBO) traders took heed by turning bearish. Last week’s Commodity Futures Trading Commission (CFTC) report showed paper traders with record longs in the market, a position which bets on oil prices continuing increase. Money managers increased their net length by 2.8%, setting an all-time high when you look at both futures and option positions. However, this report was prepared before this weekend’s big events in Asia and North Africa.
U.S. gasoline consumption fell last week and maintained a deficit to year-ago levels. SpendingPulse report showed demand for gasoline decreased by about 93,000 barrels per day (b/d), or 1%, to an average of 9.157 million b/d for the week ending April 29. Compared to the same calendar week in 2010, demand last week was 0.6% lower and the week’s demand was 1.2% lower compared to a year ago, it was the second week in a row in which the year-over-year gasoline demand shrank.
US motorists have been told speculators, unrest in the Middle East and North Africa, natural disasters, a weak US dollar and world demand were the causes for the march towards the seeming inevitability of seeing $5 per gallon gasoline at the pump. However, this march towards a never before reached milestone seems to have been broken for the time being.
However, the US Environmental Protection Agency (EPA) and the California Air Resources Board (CARB) set standards for gasoline creating areas in the country with boutique gasoline requirements. That is the main reason for the huge price differentials in parts of the country other than federal and state taxes.
The following ExxonMobil (NYSE:XOM) map shows areas of the US affected by these oxy fuel or RFG compliance requirements for gasoline:
The worst area of the country to be hit by these requirements is Chicago with gasoline in the Windy City currently the most expensive in the nation at $4.467 per gallon. They perhaps hit the $4.50 per gallon mark by the end of this week.
About the Author – Bob van der Valk is a Petroleum Industry Analyst with over 50 years of experience in the petroleum, gasoline and lubricants industry. He has been quoted by the news media and his opinions are also solicited by government entities. Bob may be reached at firstname.lastname@example.org.
This post originally appeared on EconMatters.