December 29, 2005
Higher Demand, Lower Inventories Help Support Higher Petroleum Prices
JEFFERSON CITY, MO, DEC. 23, 2005 - Consumer demand driven by the continued colder-than-normal temperatures in the Midwest and Northeast and lower refined petroleum inventories have combined to support continued high prices for transportation and heating fuels, according to the Missouri Department of Natural Resources Energy Center’s Energy Bulletin.
On Dec.21, natural gas futures closed at $14.27 per MMBtu, up $2.66 from last month and $7.45 or 109 percent higher than a year ago.
According to the U.S. Department of Energy, as of Dec. 16 the outlook for the winter heating season through March 2006 expects households heating primarily with natural gas to spend $281 or 38 percent more for fuel this winter than last winter. Approximately 57 percent of Missouri households use natural gas for heat.
The state’s average retail propane price as of Dec. 19 was $1.70 per gallon, up 5.5 cents from a month ago and 17.4 cents or 11 percent higher than a year ago.
The U.S. Department of Energy anticipates propane-heated households will spend approximately $167 or 15 percent more this winter than last. Approximately 13 percent of Missouri households use propane for heat.
The higher prices come in spite of growing inventories of U.S. crude supplies. U.S. crude oil prices also remain strong with a settlement of $58.56 per barrel on Dec. 21 compared to $58.84 last month. Domestic crude supplies increased 1.3 million barrels to 322.5 million barrels.
Crude demand fell last week following maintenance issues at New England and Gulf Coast refineries. Imports fell by 0.5 million barrels per day and U.S. production is relatively flat. Approximately 28 percent of Gulf Coast crude oil production is still shut down following Hurricane Katrina and Rita this summer.
Strong crude oil prices and growing consumer demand are pressuring retail prices higher. On December 19, the average retail price for regular gasoline was $2.12 in Missouri, up 1 percent from last month and 32 percent higher than last year. Missouri retail diesel fuel prices decreased 27 cents since last month to an average retail price of $2.38 per gallon. The decline in diesel retail prices is primarily due to higher domestic diesel supplies.
Distillate stocks, which include diesel fuel and heating oil, increased by 2.8 million barrels to 127.7 million barrels while gasoline supplies decreased by 0.3 million barrels to 204.1 million barrels for the week ending Dec. 16. Consumer demand for gasoline has increased to a new record level for the month of December at 9.3 million barrels per day, a figure normally seen at the outset of the summer driving season.
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