WSPA

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.
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