EIA: Regular Gasoline Prices May Fall Short of $3 per Gallon

April 26, 2006

While prices for regular gasoline are currently flirting with $3 per gallon, DOE's Energy Information Administration (EIA) does not expect regular gasoline prices to maintain such a high average price over the course of any month this summer. The April 19th edition of "This Week in Petroleum," an EIA publication, examined the current trend in crude oil and gasoline prices and concluded that there is good reason for optimism. First, three refineries on the Gulf Coast are returning to service, which should ease supplies. Second, some refineries that are down for maintenance should return to service soon. Both these factors lead EIA to conclude that gasoline prices should soon be coming down. However, uncertainty over crude oil supplies and any problems phasing out the MTBE additive could throw a wrench in the EIA's forecast. See the EIA report, and for the latest gasoline and crude oil prices, see the American Automobile Association's Fuel Gage Report and the New York Mercantile Exchange Web site.

Here's another reason for optimism: Shell Exploration & Production Company announced last week that it is preparing to resume oil production from its Mars oil platform, the largest producing platform in the Gulf of Mexico that was affected by Hurricane Katrina. Shell expects initial production to begin in late May and full production in late June—just in time for the hurricane season. The Mars platform represents about 5 percent of daily oil production in the Gulf. As of last week, the Mineral Management Service (MMS) reports that 22 percent of oil production and 13 percent of natural gas production remains unavailable in the Gulf. The ExxonMobil Pipeline Company has taken an unusual approach to addressing that production shortfall: in early April, the company reversed the flow direction in a pipeline that runs between Texas and Illinois, allowing Canadian crude oil to be delivered to refineries in Beaumont, Texas. See the MMS report and the press releases from Shell and ExxonMobil.