WASHINGTON (MNI) – The following is the second part of excerpts from the Energy Information Administration’s April Short-Term Energy Outlook published Tuesday:

Summer Transportation Fuels Outlook

The continuing economic recovery tends to boost gasoline and diesel fuel consumption, while the effect of higher retail prices tends to dampen it. These counter-balancing forces are expected to be prominent features of the summer driving season, which EIA defines as April 1 through September 30.

Prices.

EIA expects regular-grade gasoline retail prices, which averaged $2.76 per gallon last summer, will average $3.86 per gallon during the current driving season. The projected monthly average regular retail gasoline price peaks this year at $3.91 per gallon in early summer. Diesel fuel prices, which averaged $2.98 per gallon last summer, are projected to average $4.09 this summer. Weekly and daily national average prices can differ significantly from monthly and seasonal averages, and there is are also significant differences across regions, with monthly average prices in some areas exceeding the national average price by 25 cents per gallon or more.

As in the case of crude oil, the market’s expectation of uncertainty in monthly average gasoline prices is reflected in the pricing and implied volatility of futures options contracts. New York Harbor reformulated gasoline blendstock for oxygenate blending (RBOB) futures contracts for July 2011 delivery over the 5-day period ending April 7, averaged $3.15 per gallon. The probability the RBOB futures price will exceed $3.30 per gallon (consistent with a U.S. average regular gasoline retail price above $4 per gallon) in July 2011 is about 33 percent.

Because taxes and retail distribution costs are generally stable, movements in gasoline and diesel prices are driven primarily by changes in crude oil prices and wholesale margins. Crude oil prices that differ from our forecast would be reflected in the price of motor fuels. Each dollar per barrel of sustained change in crude oil prices relative to the forecast translates into approximately a 2.4 cent-per-gallon change in product prices, absent the consideration of factors specific to the gasoline and diesel fuel markets.

Retail price projections reflect higher prices for the refiner acquisition cost of crude oil, expected to average $112.50 per barrel this summer compared with last summer’s average of $74.70 per barrel. EIA expects wholesale gasoline margins (the difference between the wholesale price of gasoline and the refiner acquisition cost of crude oil) to average 53 cents per gallon this summer compared to 36 cents per gallon last summer, largely brought about by continuing strength in world-wide liquid fuels consumption. Similarly, EIA forecasts higher wholesale diesel margins this summer (60 cents per gallon) than last summer (40 cents per gallon).

The projected increase in gasoline prices suggests that vehicle fueling costs for the average U.S. household will be about $825 higher in 2011 than they were in 2010. According to the 2009 National Household Travel Survey (Transportation Energy Data Book, Tables 4.1 and 8.6), U.S. households drove an average 20,251 miles with an average passenger car fuel efficiency of 22.6 miles per gallon. Assuming no change in travel or average fuel economy, the increase in the average annual gasoline retail price (all grades) from $2.40 per gallon in 2009 to $2.83 per gallon in 2010 and a projected $3.75 per gallon in 2011 implies an increase in average annual household expenditures on gasoline from $2,150 in 2009 to $2,535 in 2010 and $3,360 in 2011.

Motor Gasoline.

During this summer season, projected motor gasoline consumption increases by 0.5 percent over last summer. Finished motor gasoline is supplied by four sources: domestic refinery output, domestic production and net imports of fuel ethanol for gasoline blending, primary inventories, and net imports of gasoline and gasoline blending components. EIA expects that domestic refinery production will increase by 0.6 percent from last summer, in line with growth in consumption. Projected blending of fuel ethanol increases by 5 percent from last summer. Forecast total gasoline net imports are projected to decline by about 10 percent from the previous summer. Fuel ethanol blending into gasoline averaged 868,000 bbl/d during summer 2010 and EIA forecasts an average 912,000 bbl/d this summer, which is about 9.8 percent of total gasoline consumption.

At the onset of the summer driving season (April 1) total gasoline stocks, at 215.7 million barrels, are 8.3 million barrels below the level of a year-ago, but still about 1 million barrels more than the previous 5-year average for beginning-of-season stocks. Stock withdrawals have not been a significant motor gasoline supply source for the summer season in recent years and are projected to average 48,000 bbl/d this summer, compared with 26,000 bbl/d last summer.

For the 2011 summer season, EIA expects net imports of motor gasoline and blending components to average 630,000 bbl/d, which is lower than the average 700,000 bbl/d seen last summer, due primarily to continued growth in domestic supplies and continuing strength in gasoline export markets.

Diesel Fuel.

Projected distillate fuel consumption, which includes diesel fuel and heating oil, averages 3.81 million bbl/d this summer, up 2.3 percent from last summer. That growth is buoyed by continued strength in manufacturing output and foreign trade.

Distillate fuel is supplied by four sources: domestic refinery output, biodiesel blending, primary inventories, and net imports. Refinery output of distillate fuel is projected to average 4.36 million bbl/d this summer, up slightly from the 4.35 million bbl/d last summer.

Biodiesel is a small but growing part of the distillate pool. Biodiesel consumption averaged 20,000 bbl/d last summer and is expected to grow to about 46,000 bbl/d this summer, due in part to the resumption of the biodiesel tax credit.

Distillate inventories are projected to start the summer at 153.5 million barrels, up from 146.0 million barrels last year at this time and a new record for the start of the summer season. Distillate inventories typically build during the summer season in preparation for the heating season. This summer, the build is forecast to average 40,000 bbl/d, far less than the 113,000 bbl/d recorded last summer and the 5-year average summer build of 121,000 bbl/d. As a result, end-of-summer stocks are 161 million barrels, down from the record 166.7 million barrels recorded last summer, but still 11 million barrels above the previous 5-year end-of-summer average.

Continuing strong world demand for distillate fuels is forecast to contribute to U.S. net exports of distillate fuel averaging 500,000 bbl/d this summer, up from 460,000 bbl/d last summer. In contrast, the United States was a net importer of distillate fuel, averaging 120,000 bbl/d during the summers of 2000 through 2007.

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** Market News International Washington Bureau: 202-371-2121 **

Play Video

April 12 (Bloomberg) — Stephen Schork, president of the Schork Group, talks about the outlook for oil prices. Schork speaks with Deirdre Bolton on Bloomberg Television’s “InsideTrack.” (Source: Bloomberg)

Heating oil fell the most in three weeks on speculation that U.S. distillate inventories increased last week as higher prices slowed economic growth and reduced fuel demand.

Prices slipped 2.5 percent as supplies of distillates, including heating oil and diesel, probably expanded 500,000 barrels last week, according to the median estimate of 17 analysts in a survey by Bloomberg News. U.S. import prices increased in March at the fastest pace since June 2009, led by a gain in crude oil and the biggest jump in food costs since 1994, a Labor Department report today showed.

“There’s uncertainty about what these price levels mean for the economy and demand levels,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut. “Without signs of an improving economy, you could see demand destruction at these elevated prices.”

Heating oil for May delivery dropped 7.99 cents to settle at $3.1726 a gallon on the New York Mercantile Exchange. Prices have tumbled 4.4 percent since closing at a 32-month high April 8.

Futures extended declines, following equities, after Japan raised the severity rating of its nuclear crisis to the highest, matching the 1986 Chernobyl disaster. The Standard & Poor’s 500 Index was down 0.7 percent at 2:49 p.m. in New York.

Radiation Leak

The stricken Fukushima Dai-Ichi nuclear plant, about 220 kilometers (135 miles) north of Tokyo, is leaking radiation in Japan’s worst civilian nuclear disaster after a magnitude-9 quake and tsunami on March 11.

“The Japan situation got worse and the equities are getting killed,” said Fred Rigolini, vice president of Paramount Options Inc., a broker on the New York Mercantile Exchange. “We’re in a correction mode right now. We’re seeing a lot of longs getting out.”

Heating oil’s decline was part of a broader slide in commodities. Among the 19 raw materials on the Thomson Reuters/Jefferies CRB Index of 19 raw materials, only cocoa and lean hogs were up as of 2:50 p.m. in New York.

Futures sank as Brent oil for May settlement lost $3.32 to $120.66 a barrel at 2:50 p.m. on the London-based ICE Futures Europe exchange while Nymex May-delivery crude dropped $3.67 to $106.25. Crude will experience a “substantial pullback” with Brent dropping to about $105 a barrel in the coming months, analysts at Goldman Sachs Group Inc. said. Goldman Sachs yesterday ended a recommendation to buy a basket of commodities including crude oil because the risks outweigh any further potential gain.

‘Big Sell-Off’

“You’re seeing big sell-off in commodities, the stock market is down, you had the Japanese upgrade and the Goldman reports,” said Tom Knight, vice president of trading and supply at Truman Arnold Cos. in Texarkana, Texas. “It was a confluence of headlines.”

Heating oil also came under pressure as Europe’s gasoil futures for May delivery declined 3.9 percent to $1,007.25 a metric ton on London’s ICE Futures Europe exchange at 2:52 p.m. in New York. Gasoil futures on ICE and heating oil on Nymex are traded as a substitute for diesel.

The supply of gasoil in independent storage in Europe’s Amsterdam-Rotterdam-Antwerp oil-trading hub has risen to the highest level since Dec. 19, PJK International BV said April 7.

The premium of heating oil over gasoline narrowed to 0.85 cent from 5.2 cents yesterday.

Global Growth

“Heating oil is more a barometer of global economic growth and its larger decline may be reflective of concern about global growth,” Knight said.

Gasoline for May delivery fell 3.64 cents, or 1.1 percent, to $3.1641 a gallon on the exchange.

Stockpiles probably dropped 1 million barrels last week, according to the survey. It would be the eighth consecutive decline and leave supplies at the lowest level since the week ended Dec. 24. The Energy Department is scheduled to report last week’s inventories at 10:30 a.m. tomorrow in Washington.

Regular gasoline at the pump increased 2.1 cents to $3.791 a gallon yesterday, AAA said on its website. That’s the highest price since Sept. 19, 2008.

Retail prices, which averaged $2.76 last year from April through September, will average $3.86 this year, the Energy Department said in its monthly Short-Term Energy Outlook, released today in Washington.

To contact the reporter on this story: Barbara J Powell in Dallas at bpowell4@bloomberg.net.

To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net

The first shovelfuls of dirt were turned over Friday for the construction of a multi-purpose athletic field and a softball field on the eight-acre AP Farm property, across the street from John Jay High School.

District officials, students and parents joined together to thank local philanthropists Adam Rose and Peter McQuillan,who gave the $1 million property to the district in July 2009 as a gift on the condition that it be used for the fields.

Michael Jumper, Katonah-Lewisboro’s interim schools superintendent, welcomed approximately 50 school community members and introduced two John Jay musical groups, the Rolling Tones and the Noteables, who sang the national anthem and later performed a song each.

Jumper also thanked Sandra Rose, mother of Adam Rose, for attending and presented her with a bouquet of flowers.

In his remarks, Adam Rose thanked the community for making the project happen.

“To have the vision of paying the price now to have something that lasts for generations is unfortunately so lacking today…you see so many politicians make short-sighted decisions because of personal interests or political agendas,” he said. “It’s very nice of you to thank us, but we turn it back to you…the fact that the money is being invested will benefit the community for a very, very long time.”

The funding for the project comes from a $3.15 million public referendum that was approved by district residents in December 2009. The vote moved the money to a capital reserve fund for the purpose of building the fields, improving the existing baseball field, renovating high school arts spaces and other improvements.

The multi-purpose field, scheduled to be completed by September, will be a rectangular field with an artificial turf so it can be used for  soccer, lacrosse and field hockey. The softball field will be made up of natural grass.

The school board approved in March to award a $2,497,000 contract to Landscape Unlimited of Somers to build the fields, and a $107,447 contract to Southeast Mechanical Corp. of Brewster, for the in-school improvements.

Check out the video for highlights of Friday’s ceremonies.

Thanks for reading. Like Patch? You can “like” us on Facebook here and follow us on Twitter  here.

04/13/2011

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Apr 13, 2011 4:47:05 PM | Weblogs

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