According to the Energy Information Administration, for the first time in six weeks, the U.S. average price for regular gasoline fell, dropping two cents to $2.80 per gallon, 75 cents above last year at this time. The West Coast (Alaska, Arizona, California, Hawaii, Nevada, Oregon, and Washington) average price inched up less than half a cent to $3.04 per gallon and the California price slipped less than half a cent, remaining at $3.09 per gallon.
     The U.S. average price for diesel fuel also declined somewhat, slipping nearly a penny to $2.94 per gallon. The average was 72 cents above a year ago. At $3.03 per gallon, the diesel average on the West Coast was unchanged and the California price was essentially unchanged at $3.07 per gallon.
     Oil Price Information Service (OPIS) reported on Thursday that the U.S gasoline market is in better balance than most industry watchers believe, according to an equities research report on independent refiners by Macquarie Bank.
    "In general, our analysis suggests that the demise of the U.S. gasoline market as predicted by many industry observers is greatly exaggerated, at least over the next five years," the bank said.
    "We acknowledge that fuel efficiency gains of the vehicle fleet, negative impacts of future carbon legislation, and possible further penetration of biofuels could potentially erode petroleum-based gasoline fundamentals longer-term, but we believe the impacts of these factors (are) well beyond our five year window," it added.
    U.S. petroleum-based gasoline demand is expected to begin growing again over the next five years, as the number of miles traveled by the U.S. vehicle fleet has recovered from 2008 lows and demand destruction from fuel economy gains appears drastically overstated. Supply and demand are expected to remain in relative balance in 2010-11.
    Crude oil prices surpassed 18-month highs on Thursday morning and closed the week at $84.87 for domestic crude.
    OPIS reports that some of the strength for crude prices may be due to new money flowing into the market with the end of the first quarter yesterday. Typically, funds get additional money to push into the market at the beginning of each quarter.

Chris Nobles
Commercial Fueling
Nella Oil Company