Light, sweet crude continues to hover around the $47 mark climbing as high as $48.05 but then going back down. Gasoline went up 2 cents to $1.44 a gallon and Brent North Sea crude is 58 cents this morning to $48.68.
The prices continue to hover more then $10 lower than the all time high achieve back in the beginning of April after take a steep drop yesterday after Dept. of Energy reports said U.S. inventories of petroleum continue to swell to their highest levels since 1999.
U.S. inventories grew 4.3 million barrels to 334 million and gasoline stocks rose 1.1 million barrels to 214 million. Many experts feel the market is well supplied as OPEC pumps at its highest levels in over two decades. OPEC has the pumps wide open at 30 million barrels a day and state emphatically that they can pump a lot more.
”I stand here to tell you that Saudi Arabian reserves are plentiful, and we stand ready to raise output as the market dictates,” Naimi said at an energy confidence in Washington on Tuesday.
Diesel Prices Remain High
Most goods in the U.S. reach their final destinations by tractor-trailer rigs and while prices for gasoline at the pump are important, the prices of most retail good are directly affected by the prices involved in getting the goods to their destination. Diesel prices continue to remain high. With tractor-trailers and most industrial trains using that diesel, goods will continue to be high.
Traditionally, diesel prices go up some in the winter period to reflect the shift in heating oil away from gasoline as the petroleum market emphasis. Diesel fuel prices usually go to premium levels. The current trend started back in Sept. of 2004 and has not abated, even though traditionally, diesel prices tend to drop off as the shift moves to gasoline and the summer driving season.
According to the EIA, the 50% of the pump prices goes to the cost of crude, 21% for refining, 6% for marketing and distribution and 23% in taxes. (source: EIA Gas). The Dept. of Energy said this in their weekly report:
Not only has the diesel premium matched or lasted longer than at any time since EIA began collecting weekly retail diesel prices in March 2004, but the gap widened sharply this winter. Historically, the price gap averaged about 2 to 8 cents per gallon in favor of diesel fuel during the winter. However, the winter of 2004-05 saw the gap widen to an average of about 11 cents per gallon through May 16, 2005, including a nearly 20-cent-per-gallon price premium reached on December 27, 2004.
The report went on to say that the primary reason is distillate fuel inventories like diesel fuel and heating oil were extremely low and the situation may not change as the driving season rolls in and the shift to gasoline production becomes primary. Distillate fuels aren’t the emphasis so stocks will continue to dwindle even though OPEC said they will be prepared for the 4th quarter even though worldwide demand will continue to increase.
This means that the costs of goods will probably continue to remain high or go up.
John Stith is a staff writer for Murdok covering technology and business.
