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 »

In today's episode, I interview Patrick Kelly, API's policy advisor for downstream fuels issues, about the completion of the transition from low sulfur diesel to Ultra-Low Sulfur Diesel (ULSD) fuel for highway travel.

Use the audio player below to listen to information about the transition and follow along with the show notes. I hope you find the podcast informative.

00:17 Dec. 1, 2010 marks a milestone for the U.S. transition to Ultra-Low Sulfur Diesel fuel (ULSD). On that date, this redesigned diesel fuel will become the only diesel fuel sold throughout the country for highway travel. API's Patrick Kelly has been involved in this transition and is here in the studio with us today.

00:42 First of all, how does ULSD fuel differ from the type of diesel that has... more »

API reported today that April gasoline production climbed to 9.1 million barrels per day, which is the highest level ever for April and second highest level for any month on record, according to the Monthly Statistical Report.

Gasoline demand also rose last month, and U.S. refinery utilization climbed above 85 percent for the first time this year. API Chief Economist John Felmy said the data indicates that refiners are cognizant of consumers' need for gasoline and are producing fuel to keep America moving.

In one particularly bright spot, the April statistics showed that U.S. distillate demand surged 6.7 percent over the April 2009 level. The demand for distillates, including diesel fuel, historically has had a strong correlation with economic activity.

In April, demand for Ultra-Low Sulfu... more »

U.S. gasoline production and gasoline demand set new records for a February, according to API's Monthly Statistical Report issued this morning.

February gasoline production increased 0.4 percent to a record February high of 8.8 billion barrels per day. Meanwhile, gasoline demand grew by 2.2 percent over the same month a year ago.

Gasoline (and components) imports fell in February by 25.9 percent from the same period last year to 813,000 barrels per day.

"These numbers clearly show that the refining industry is making the gasoline consumers are demanding--and making it at record levels," API Chief Economist John Felmy said.

U.S. crude oil production also increased in February to the highest level since June 2005. Baker Hughes reported the U.S. rig count climbed by 6.6 percent over January a... more »