Gasoline prices continued their upward climb this week, surpassing year-ago prices for the first time in 51 weeks. The average U.S. retail price for regular gasoline hit a new 2009 high on Friday, jumping 6 cents over the week to $2.70 a gallon, 15 cents above year-ago prices, yet still $1.41 below the record price of $4.11 set last July. What a difference a year makes. October 2008 saw gasoline prices drop $1.12, from $3.62 a gallon on October 1 to $2.50 a gallon on October 31. Fast forward to October 2009 and gas prices increased $0.23 cents, from $2.47 a gallon on October 1 to $2.70 on October 31.
Crude oil continued to trade above the $80 a barrel mark for most of the week, fueled by positive domestic economic news. At the close on Friday crude settled at $77.00, up 4% over last week. News that the U.S. economy returned to growth in the third quarter revived expectations for an increase in fuel demand. Crude oil prices averaged $68 a barrel in the third quarter, down from $118 a barrel during the same period last year.
In its weekly report, the Energy Information Administration (EIA) reported crude stocks rose 800,000 barrels to 339.9 million barrels, contradicting the American Petroleum Institute’s (API) report of a 3.5 million barrel drop. The EIA also reported demand for all petroleum products remained at 18.7 million barrels per day (bpd) over the last four weeks, down 3% from last year.
Also this week, major oil companies released dismal third quarter profit reports. Exxon Mobil, the world’s largest oil company saw net profits drop 68% in the third quarter. Chevron, the world’s second largest oil company, saw a 51% drop in profits. Shell, Europe’s largest oil company, saw profits drop 73%. Refiners around the world have seen margins fall this year as a result of the global recession, a steep drop in crude oil prices and weak demand.
The Weekend
“Motorists have undoubtedly felt a pinch at the pump in recent weeks,” said David Weinstein, Manager of Public and Government Affairs for AAA Mid-Atlantic. “Gas is almost 25-cents a gallon more than a month ago, mainly because of higher crude oil prices. If crude oil prices level off or decline, it will help halt increases at the pump later this year. In the meantime, it’s possible that we’ll be paying a few pennies more in the days ahead.”
The Week Ahead
Many indicators and analysts suggest crude oil may have peaked since hitting a 2009 high above $82 a barrel last week. A somewhat strengthening U.S. dollar, gradual economic recovery and decreased demand could send crude oil prices back down to the $65 to $75 range. That would help keep pump prices down. Don’t forget that last year at this time, U.S. motorists were paying some of the lowest fuel prices of the decade.
CURRENT AND PAST GAS PRICE AVERAGES
Regular Unleaded Gasoline (*indicates record high)
11/01/09 | Week Ago | Year Ago | |
National | $2.70 | $2.67 | $2.46 |
New Jersey | $2.55 | $2.50 | $2.42 |
Trenton | $2.57 | $2.53 | $2.42 |
Cape May County | $2.53 | $2.49 | $2.39 |
Burlington County | $2.53 | $2.50 | $2.32 |
Middlesex, Somerset, Hunterdon | $2.56 | $2.51 | $2.46 |
Monmouth, Ocean Counties | $2.54 | $2.49 | $2.38 |
Crude Oil | $77.00 per barrel (close on Friday) | $80.50 per barrel | $64 per barrel |
