By Brian L. Milne, Refined Fuels Editor, Telvent DTN
The Energy Information Administration’s (EIA) U.S. retail gasoline average has increased for three straight weeks since June 27, climbing 4.1 cents to $3.682 per gallon for the week-ended July 18, which is 96 cents higher than the same week in 2010. Since reaching a 32-month high on May 9 at $3.965 per gallon, the current U.S. average is down 28.3 cents.
For the week through July 25, wholesale gasoline costs have mostly increased, although those gains were limited. Still, look for the retail average to edge higher again in EIA’s final report for July.
Wholesale gasoline costs moved higher alongside climbing crude prices, with the U.S. West Texas Intermediate crude benchmark crossing above $100 bbl in trading on the New York Mercantile Exchange on July 21 for the first time since June 10, and traded above the century mark again on July 22. WTI crude prices didn’t stay above the $100 barrel price benchmark for long, but it does illustrate a bullish market sentiment held by many in the oil patch.
Greater gasoline costs are coming despite reduced demand for the fuel amid ongoing high prices at the pump coupled with unrelenting issues on the employment front, with the U.S. unemployment rate stubbornly holding above 9%, currently at 9.2%.
View Telvent DTN’s Weekly and Historical Gasoline Price Index.
As noted frequently, gasoline demand in the U.S. is negatively impacted when both prices for the fuel and unemployment are high. That relationship was again supported by data released July 25 by the Federal Highway Administration showing vehicle miles traveled in the U.S. down 1.9% in May compared with May 2010. The decline in May VMT occurred alongside surging prices for retail gasoline and higher unemployment.
For the first five months of 2011, cumulative travel in the U.S. is estimated at 1,193.6 billion VMT, a decrease of 11.7 billion miles or 1.0% from the comparable 2010 period.
About the Author
Brian L. Milne is the Refined Fuels Editor for Telvent DTN—a leading business-to-business provider of real-time commodity information services. Milne has been focused on the energy industry for 15 years as an analyst, journalist and editor. He can be reached at [email protected].