Fuel Prices Have Peaked For 2011

Fuel Prices Have Peaked For 2011

Energy watchers claim we've seen this year's high for gas and diesel fuel prices.

There's good news and not-so-good news on fuel prices. The good, according to two energy industry analysts is that gasoline and diesel fuel prices are declining. The not-so-good news is that they aren't declining as fast as anyone would like.

The crude oil market factors that pushed oil prices over $110 a barrel in early May are now being offset by rising supplies of summer grade fuels. That's likely to keep summer retail gasoline prices under $4 a gallon, predicts Wally Tyner, a Purdue University agricultural energy policy specialist. But he adds this disclaimer: "Pump prices could rise again if oil production is interrupted."

Even the U.S. Energy Information Administration's latest weekly analysis of gasoline and diesel fuel prices has backed off its early May predictions, according to EIA's Industry Economist Neil Gamson. After the Mid-East turmoil, the Mississippi Gulf flooding complications and the spring refinery shift to summer grade fuels, retail fuel prices are just beginning to reflect a more normal supply situation, he suggests. As always in this market place, retail prices are quick to rise and slow to fall.

Tyner calculates that the Libyan conflict sent crude oil up about $15 per barrel – about 40 cents per gallon of gasoline at the pump. The May 1 change-over from winter to summer blend gasoline added another 10 cents a gallon.

Refinery troubles on the East and West coasts plus slowed barge traffic on the Mississippi River sent refining margins off the chart – from about $12 per barrel to $23 to $30 a barrel, adding another 26 cents or more per gallon at the pump.

"Consumers will continue to pay that summer gas premium," Tyner adds. But, "What happened this spring is not likely to be repeated."

Where fuel prices are headed

EIA forecasts that the annual average regular-grade retail gasoline price will cost $3.63 per gallon 2011 and $3.66 per gallon in 2012. But it could average $3.81 per gallon from April through September, peaking with a June average of $3.88.

EIA forecasts that on-the-road diesel fuel prices will average $3.89 per gallon for 2011 and $3.93 per gallon in 2012.

If crude oil stays below $100 and there are no further refinery issues, "we've seen the worst," adds Tyner. "We can hope for steady or even somewhat falling prices over the next few months."

In the following EIA graph and price tables, you'll see the price-peak in both fuels. You can also see the wide variation in fuel prices by region, as of this week. Fuel taxes typically add 12% to the price. Knocking off 12% will get prices closer to what farmers can expect for off-road fuel.

With gasoline and diesel fuel prices still on a long-term upswing, more farmers are considering alternative energy sources, including solar. Available state and federal grants plus net metering make them considerably more attractive.

 

U.S. Gasoline and Diesel Fuel Prices, 05/23/11

          

Gasoline  (Dollars per Gallon)                        Diesel Fuel  (Dollars per Gallon)

05/23/11                           Change from          05/23/11                           Change from

                           Price     Week Ago              Year Ago                         Price       Week Ago     Year Ago

U.S.                    3.849     -0.111      1.063       U.S.                    3.997     -0.064      0.976

East Coast          3.859     -0.093      1.067       East Coast          4.011     -0.064      0.972

New England       3.977     -0.068      1.127       New England       4.161     -0.046      1.063

Central Atlantic     3.912     -0.081      1.084       Central Atlantic    4.138     -0.072      0.973

Lower Atlantic      3.784     -0.109      1.036       Lower Atlantic     3.943     -0.062      0.962

Midwest               3.817     -0.157      1.123       Midwest              3.942     -0.073      0.957

Gulf Coast           3.710     -0.113      1.012       Gulf Coast          3.935     -0.061      0.958

Rocky Mountain   3.733     -0.024      0.879       Rocky Mountain  4.101     -0.033      0.994

West Coast          4.036     -0.081      1.027       West Coast         4.201     -0.047      1.069

California             4.121     -0.097      1.072       California            4.287     -0.084      1.125

Courtesy of Energy Information Administration  

 

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