February 1, 2007
How Low Can They Go?
Crude oil futures prices settled just above $50 per barrel on January 18, their lowest settlement price since May 2005. Crude prices dropped sharply over the last couple of weeks in response to above normal product inventory levels and lower demand.
But the price relief may be over as economists are pointing to a number of factors that have begun to push pump prices higher. The Presidentís State of the Union address called for expanding the national petroleum reserve and outlined Middle East foreign policy moves, both of which led to petroleum price increases according to market experts.
Still, consumers enjoyed the relief while it lasted in January as oil costs fell. Gasoline and natural gas prices followed suit while propane prices were fairly constant, according to the Missouri Department of Natural Resources Energy Centerís semimonthly Energy Bulletin.
The U.S. Department of Energyís (USDOE) weekly storage report showed a significant increase in supplies of crude oil of 6.8 million barrels in mid January.
U.S. gasoline supplies were 5.2 million barrels higher compared to the same period in 2006 and diesel supplies are up by 7.3 million barrels from last year.
National demand for motor gasoline last week averaged 9.1 million barrels per day, a decrease of 140,000 barrels from earlier in the month an increase of 0.5 million barrels per day compared to last year at this time.
Missouriís average retail price for regular gasoline fell nearly $0.14 per gallon since December 18 to $2 per gallon on January 15. Locally prices in Scotland County fell below the $2 mark as January came to a close.
The retail average is $0.16 lower than a year ago. Missouriís average price remains below the U.S. average price of $2.23 and the Midwest average retail price of $2.08 per gallon. That figure continued to decline in recent weeks according to the Energy Information Administration. The national average fell to $2.16 a gallon late in January and remained at that level for 2 weeks. Prices in the Midwest actually rose a bit as the month came to a close, the lone region in the U.S. not to experience a continuing decline. Prices dropped to an average of $1.99 on January 22 but rose back up to $2.08 by January 29.
On January 15, Missouriís average diesel fuel retail price was $2.37 per gallon, about $0.11 lower from last month and $0.02 or 1 percent higher than last yearís average retail price of $2.35.
U.S. natural gas supplies as of January 12 totaled 2,936 billion cubic feet, which is 20 percent above the 5-year average inventory level for the week.
Natural gas prices closed at $6.23 per MMBtu, $0.54 lower in the past month and $2.46 below last yearís price of $8.69 per MMBtu, a difference of 28 percent.
Propane supplies fell by 2.24 million barrels last week but are 4.5 million barrels higher than this time last year. Residential propane prices averaged $1.67 per gallon on January 15, the same as last month and less than $0.03 lower than last year at this time.