More assurance about summer gas prices
The latest Short-term Energy Outlook produced by the U.S. Energy Information Administration affirms that retail prices for transportation fuels through September should be significantly lower than those of last summer. Regular gasoline retail prices are expected to average $2.23 per gallon, versus $3.81 per gallon last summer. The price of diesel will peak at approximately $2.30 a gallon, almost half of last summer’s average $4.37 per gallon.
In the same breath, however, the EIA reminds us that even the shortest-term picture can change quickly. To illustrate its point, the agency calls attention to “sizable” participation in futures options contracts for the near-term, with a wide variety of strike prices, proving that prices can move across a broad range in a short period of time.
Consumption of gasoline will be slightly higher than last year, as the lower prices offset a weak economy. Consumption of distillate fuels will be about five percent less than last summer, as distillates are more impacted by the economic downturn, in particular, industrial output and foreign trade.
It follows that the yields refiners make from processing crude oil into distillates will fall to 26.3 percent from 27.8 percent, while gasoline yields will notch up to 45 percent from 42.8 percent last summer. Refinery utilization rates are expected to average 84 percent, the lowest since summer 1985.
It is worth noting that refiners will pay an average $52 per barrel for raw crude, compared to $116 per barrel last summer. Yet the margin between the wholesale price of gasoline and the average cost of crude to refiners is projected to remain relatively unchanged at 39 cents per gallon.
With the gap between gasoline and distillate fuels shrinking, any further downside in the economy could cause retail diesel prices to fall below those for gasoline.
Published Tuesday, April 21st, 2009 at 9:07 am and filed under Industry News.