Transportation Fuels Market
Gas Prices
If you’ve visited your local service station lately this
spring, you probably noticed that gasoline prices have been moving upward. At
WSPA, we understand that fuel expenses can be a major outlay for families and
businesses alike.
One of our ongoing goals is to help people understand
the underlying factors that influence gasoline and diesel fuel
prices.
It’s not unusual for fuel prices to trend higher in the spring
and summer seasons. In California, we recently completed the required
transition from our winter blend of reformulated gasoline to the summer blend.
And warmer weather and the end of the school year are usually accompanied by
increased driving as families take to the roads for vacations.
In 2008,
crude oil costs rose dramatically and peaked around mid-year. This trend was
mirrored by rises in gasoline and diesel prices. Those crude oil costs and
product price increases were followed by dramatic declines through the end of
the year.
In 2009, we are seeing similar trends in fuel costs and
product prices.
Crude oil costs have increased steadily during the
first five months of 2009. Experts indicate that a significant contributing
factor to increases in gasoline and diesel prices appears to be the increases in
the cost of crude oil.
And why have crude oil values risen? According
to the U.S. Energy Information Administration (EIA), the increases in crude oil
costs in the first half of 2009 appear to be the result of expectations that the
global recession may have bottomed out.
“Energy prices rose in early
May following reports suggesting that the U.S. economy may have reached a
turning point in the current recession, at least in some sectors,” the EIA wrote
in its monthly Short-Term Energy Outlook released May 12, 2009.
And,
China’s manufacturing output is also on the rise, with increases reported for
three consecutive months (March through May). This activity requires increased
energy supplies.
Increasing product demand also appears to be
contributing to recent price movements. After several months of declines,
demand for gasoline in the U.S. and the West increased in March of
2009.
Nobody knows what the cost of crude oil and the prices for gasoline
and diesel fuel will be tomorrow or beyond. But, we do know that when the
economy recovers from the current recession, there will be new demands placed on
the world’s current petroleum supplies.
That’s why it’s important, even
in difficult economic times like these, that we look to the future and make sure
we’re doing all we can to ensure a stable and affordable supply of energy for
consumers. WSPA believes greater access to and use of domestic energy supplies,
conservation, higher efficiency and use of increasing amounts of alternative and
renewable fuels will help us meet that objective.
For more information on
gasoline and diesel market situation, visit
The Energy Information Administration
For a fact sheet on market conditions in the western United States, click
here.