Gasoline prices rose to their highest level in the past two years yesterday. According to AAA, the average price of gasoline climbed one penny Dec. 29 to $3.071 per gallon. This is the highest level since October 15, 2008, when the average price of gasoline reached $3.084.

If you've been reading this blog, you're aware that the cost of crude oil is the largest factor in the price of gasoline. Between November 17 and December 28, crude oil prices increased 26 cents per gallon to $2.18 per gallon ($91.49 per barrel), which was the highest level in October 3, 2008, when the per-barrel price reached $93.88.

Demand for gasoline and diesel fuel also have climbed recently. Last month, according to API's Monthly Statistical Report, gasoline demand rose 3.2 percent over November 2009. Demand for Ul... more »

"Stronger fuel demand tells us a recovery is underway." Those are the words of API's Chief Economist John Felmy today, describing the good news in API's Monthly Statistical Report for November. The report shows that U.S. petroleum deliveries (a measure of demand) climbed 6.5 percent last month over November 2009. The increase was the largest year-to-year increase for any month in 2010.

Deliveries of Ultra-Low Sulfur Diesel (ULSD) fuel--the type that is required for all on-road diesel vehicles, including trucks delivering goods--jumped by 13.2 percent in November. Gasoline deliveries rose 3.2 percent last month as compared to the same time period last year.

"Fuel demand continues to strengthen, a positive sign for our economy," John said. "Gasoline deliveries are up three months in a row an... more »

Crude oil prices reached a two-year high on Friday. At the end of the trading day, it closed at $89.19 per barrel, up nearly 21 cents a gallon since November 17.

During the same time period, gasoline prices rose 9.7 cents per gallon to a nationwide average of $2.951, which is the highest level since October 18, 2008. AAA reports that 17 states have retail pump prices above $3.00 a gallon.

As we've noted here, historically gasoline prices have tended to track crude oil. The cost of crude oil is the largest factor in the pump price of gasoline. Several factors also can have an impact, including the value of the dollar (oil is traded in U.S. dollars worldwide) and weather. But the fundamentals of supply and demand play the biggest role. As API statistics show:

• Gasoline supplies are above las... more »

Are you planning a trip during the upcoming Thanksgiving Day holiday? For those of us in the Washington, D.C. area, the Wednesday before Thanksgiving is the single busiest day on surrounding highways during the entire year.

There's little doubt that travelers will be watching gasoline prices as they plan their trips, and some will wonder why prices have been higher this fall than one year ago. The answer is simple: Gasoline prices tend to track crude oil prices, and the cost of crude oil has increased by nearly $10 a barrel in recent weeks.

There are several factors that influence the price of gasoline, but the most important is the cost of crude oil. Gasoline is refined from crude oil, and the cost of crude is determined in the global marketplace.

On November 1... more »

API Chief Economist John Felmy told reporters this morning that there is glimmer of hope that the economy might be improving. API's Monthly Statistical Report for September shows that U.S. demand for oil products grew last month, foreshadowing a shift from economic stagnation to recovery.

In September, deliveries (a key indicator of demand) of distillate products surged 6.9 percent over the same time period last year, driven in part by a 9.4 percent increase in demand for Ultra-Low Sulfur Diesel (ULSD) fuel. ULSD fuel is used by long-haul trucks to deliver goods and services across the country and is used by economists as a measure of the nation's economic activity.

"The September data suggest a move toward economic recovery," John said. "Stronger distillate demand indicates an uptick in i... more »