Gasoline prices dip, drive-offs don’t

Gasoline and diesel prices decreased, according to the latest data from the Energy Information Administration (EIA), but prices remain high, and that, according to media reports, is resulting in many more drive-offs.mp2

For example, in Cape Girardeau, Mo., according to police reports, 66 gas drive-offs were reported in May, making it the busiest month for drive-offs since October, according to a June 5 article by Peter Wyle in The Southeast Missourian. April had the second most with 53 reports, according to the article. Overall in Missouri, gas prices are up 17 percent from a year ago, according to the Web site missourigasprices.com.

In Kennewick, Wash., reports of two or three drive-offs each day are common, Police Sgt. Scott Child told KNDO, an NBC affiliate. “It's been a continual flow," Scott said.

In the first 22 days of May, police and sheriff's deputies in Black Hawk County, Iowa, received 60 reports of people driving off without paying for fuel, according to a June 3 article by Jeff Reinitz in the WCF Courier, an Iowa newspaper.

Although the U.S. average retail price for regular gasoline decreased, falling 5.2 cents to 315.7 cents per gallon as of June 4, 2007, prices are still 26.5 cents per gallon higher than this time last year, according to the June 6 edition of “This Week in Petroleum,” published by the EIA. All regions reported price decreases. East Coast prices dropped 3.0 cents to 306.8 cents per gallon. The largest regional decrease was in the Midwest, where prices fell 9.5 cents to 322.5 cents per gallon. Prices for the Gulf Coast decreased 4.7 cents to 302.0 cents per gallon, while Rocky Mountain prices fell 1.6 cents to 326.0 cents per gallon. West Coast prices were down 3.1 cents to 331.8 cents per gallon. The average price for regular grade in California was down 3.3 cents to 337.4 cents per gallon, but remains 10.5 cents per gallon above last year's price.

Retail diesel prices also fell last week, decreasing 1.8 cents to 279.9 cents per gallon. Prices are 9.1 cents per gallon lower than at this time last year. All regions reported price decreases. East Coast prices fell 1.7 cents to 279.4 cents per gallon. In the Midwest, prices were down 1.9 cents to 276.4 cents per gallon, while the Gulf Coast saw a decrease of 2.7 cents to 274.9 cents per gallon. Rocky Mountain prices were down 2.2 cents to 295.8 cents per gallon. Prices on the West Coast saw a decrease of 0.8 cent to 293.1 cents per gallon, while California prices fell 0.3 cent to 297.2 cents per gallon, 25.5 cents per gallon lower than at this time last year.

Lately, while retail gasoline prices have received the bulk of attention, a related statistic, refinery utilization, is also being closely watched, according to the EIA, which noted that it is “instructive to look at the pattern in recent years.”

In 2004 and 2005, prior to the devastating hurricanes in the fall of 2005, refinery utilization rates recovered sharply from seasonal late winter maintenance to reach levels by May and June hovering around 95 percent, the EIA said. However, refinery utilization rates in May and June 2006, and again in May 2007, were well below that percentage. The 2006 refinery utilization data was influenced by Hurricanes Katrina and Rita both directly and through their impacts on maintenance schedules. This year, refinery outages and maintenance extending into the early part of summer have kept refinery utilization rates at roughly 90 percent.

In a refining system where capacity is over 17 million barrels per day, 5 percent can equate to nearly 900,000 barrels per day in additional crude oil inputs to refineries, providing at least that much in additional refined products, the EIA noted.

With crude oil inventories at the top of the average range, there is certainly enough additional crude oil that can be used in refineries, and with gasoline inventories well below the average range, there is certainly a need for more gasoline supply, the EIA noted. While gasoline inventories have built in recent weeks, largely due to increased imports and higher blending activity, additional refinery production of gasoline would certainly help gasoline inventories rebuild to more normal levels more quickly than the current pace, the EIA said. With gasoline refining margins (the difference between the spot price of gasoline and the cost of crude oil) at very high levels, refiners have a strong economic incentive to run their units at the highest possible rates, the EIA said, suggesting that unplanned refinery outages and extended maintenance are the key drivers of current utilization patterns.