In our trip down to North Carolina from New York, we loaded up with $1.65 per gallon gasoline in northwestern Virginia. Amazing. The national average price is now below $1.90 and is probably near the bottom if the higher wholesale prices of the last couple of days hold any sway. But there is some downside potential on today’s EIA petroleum report‘s finding that our consumption of gasoline and distillates remains significantly below last year’s levels. Even with prices more than a dollar per gallon below last year for gasoline and diesel, demand was 5.5% and 5.6% lower, respectively. Continued low consumption could allow prices to fall another dime or so before stabilizing. News of China cutting its federal interest rate more than 1% today buoyed oil prices up even though crude inventories had a big gain on higher than normal imports. The weak link in petroleum supplies continues to be propane, with below-average inventories and strengthening winter heating demand.
In natural gas, the EIA reported today that last week’s cold weather took a big bite from our inventory surplus. Inventories are now 2.6% above the 5-year average, rather than the 4.2% cushion reported last week. Continued cold weather will pressure natural gas prices to pass $7 per MMBtu — still significantly below last summer’s high but a price level that allows US producers to keep up their aggressive drilling to increase domestic production.
After the Thanksgiving Holiday, I plan to write about the interesting developments in US electricity consumption – namely significant decreases in consumption that may allow renewables to take an even greater share of generation in 2009. If these trends persist, they may lower greenhouse gas emissions even more than the 2.5% cut projected for 2008 last week and lower costs for consumers.
Happy Thanksgiving and good luck to you in your Sustainable Energy Transition!
Tags: China, climate change, gas price, Natural Gas, Oil