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03/23/2007

Pumpin' Gas

With all the talk of rising gasoline prices, once again, and the
upcoming “summer driving season,” as if the other nine months
of the year we stay home, I thought I’d peruse the databank over
at the Energy Information Administration (eia.doe.gov) and pass
along how the price of gasoline acts during each of the four
seasons.

What I have done below is take the national average retail
gasoline price at the pump for the 4th week of each month where
the season changes December, March, June, September. [For
the EIA’s purposes, the week ends on a Monday. So for the
week ending March 19, 2007, the price was $2.62 on average for
“all grades, all formulations,” not simply “regular.”

How to read this:

1900 W 100 SP 110 SU 120 F 110

[Year, season, cents per gallon the 4th week in Dec. 1899. So
during the winter, the price of gasoline rose from $1.00 to $1.10,
then from $1.10 to $1.20 during the spring, and fell from $1.20
to $1.10 over the summer. ]

1996 W 112 Sp 121 SU 128 F 125

1997 W 127 SP 125 SU 123 F 126

1998 W 116 SP 104 SU 109 F 105

1999 W .97 .SP 105 SU 115 F 130

2000 W 131 SP 154 SU 169 F 158

2001 W 145 SP 144 SU 158 F 152*

2002 W 111 SP 138 SU 142 F 143

2003 W 144 SP 173 SU 153 F 168**

2004 W 152 SP 178 SU 196 F 195

2005 W 183 SP 219 SU 225 F 285***

2006 W 224 SP 254 SU 291 F 242****

2007 W 238 SP 262 [3/19]

Notes:

Again, the prices are for “all grades, all formulations.” The
current average pump price for “regular” is around $2.50.

*The price before and after 9/11 was little changed. On 8/27/01
it was $1.52; 9/17 $1.56; 9/24 $1.52

**Before and after Iraq War started (3/19/03). 3/3/03 $1.72;
3/24/03 $1.73

***Katrina (hit on 8/29/05). 8/1/05 $2.33; 8/29/05 $2.65;
9/5/05 $3.11; 9/19/05 $2.83. The price listed above, $2.85, is
for 9/26/05. [Just to refresh your memory, oil, gasoline and
natural gas all spiked big time because of the damage to the
energy infrastructure both in the Gulf and along the coast. But
shortly after it was determined that most of it could be repaired
and brought back on line in fairly short order, so the markets
calmed down.]

****Summer 2006. From 7/10/06 thru 8/14/06, the average retail
price was at $3.00 or better. It then declined 10 weeks in a row,
8/14/06 thru 10/23/06, to $2.25.

So what can you deduce from all the above? For the last nine
years, including this one (and making an assumption as to the
next few months), the price of gasoline rose from the start of
winter to the start of summer. Also, in seven of the last nine
years the retail price has declined during the fall, with the other
two being essentially unchanged.

And going back to 1996, you can see that the market, as
measured by the price of gasoline, has already discounted the
impact on supply and demand for the “summer driving season”
right about when summer starts! [Except for the Hurricane
Katrina shock.]

[Taking out any geopolitical or weather-related shocks, as well
as any drastic moves by OPEC on the supply front, the price of
gasoline is more about refinery output than anything else. It
also has to do with the fact this nation hasn’t built any new ones
in over three decades (though we’ve expanded capacity at
existing facilities). As the refiners undergo key maintenance in
the winter and spring, while gearing up for the switch to summer
blends in many parts of the country as mandated by state
governments, that takes a lot of supply off the table; ergo, prices
tend to rise given generally static demand.]

As I’ve pointed out in a few past Wall Street History columns,
it’s all kind of like the yearly talk of a “summer rally” in stocks.
Summer is the worst of the four seasons, in actuality, when it
comes to equity performance.

Wall Street History continues next week.

Brian Trumbore



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-03/23/2007-      
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Wall Street History

03/23/2007

Pumpin' Gas

With all the talk of rising gasoline prices, once again, and the
upcoming “summer driving season,” as if the other nine months
of the year we stay home, I thought I’d peruse the databank over
at the Energy Information Administration (eia.doe.gov) and pass
along how the price of gasoline acts during each of the four
seasons.

What I have done below is take the national average retail
gasoline price at the pump for the 4th week of each month where
the season changes December, March, June, September. [For
the EIA’s purposes, the week ends on a Monday. So for the
week ending March 19, 2007, the price was $2.62 on average for
“all grades, all formulations,” not simply “regular.”

How to read this:

1900 W 100 SP 110 SU 120 F 110

[Year, season, cents per gallon the 4th week in Dec. 1899. So
during the winter, the price of gasoline rose from $1.00 to $1.10,
then from $1.10 to $1.20 during the spring, and fell from $1.20
to $1.10 over the summer. ]

1996 W 112 Sp 121 SU 128 F 125

1997 W 127 SP 125 SU 123 F 126

1998 W 116 SP 104 SU 109 F 105

1999 W .97 .SP 105 SU 115 F 130

2000 W 131 SP 154 SU 169 F 158

2001 W 145 SP 144 SU 158 F 152*

2002 W 111 SP 138 SU 142 F 143

2003 W 144 SP 173 SU 153 F 168**

2004 W 152 SP 178 SU 196 F 195

2005 W 183 SP 219 SU 225 F 285***

2006 W 224 SP 254 SU 291 F 242****

2007 W 238 SP 262 [3/19]

Notes:

Again, the prices are for “all grades, all formulations.” The
current average pump price for “regular” is around $2.50.

*The price before and after 9/11 was little changed. On 8/27/01
it was $1.52; 9/17 $1.56; 9/24 $1.52

**Before and after Iraq War started (3/19/03). 3/3/03 $1.72;
3/24/03 $1.73

***Katrina (hit on 8/29/05). 8/1/05 $2.33; 8/29/05 $2.65;
9/5/05 $3.11; 9/19/05 $2.83. The price listed above, $2.85, is
for 9/26/05. [Just to refresh your memory, oil, gasoline and
natural gas all spiked big time because of the damage to the
energy infrastructure both in the Gulf and along the coast. But
shortly after it was determined that most of it could be repaired
and brought back on line in fairly short order, so the markets
calmed down.]

****Summer 2006. From 7/10/06 thru 8/14/06, the average retail
price was at $3.00 or better. It then declined 10 weeks in a row,
8/14/06 thru 10/23/06, to $2.25.

So what can you deduce from all the above? For the last nine
years, including this one (and making an assumption as to the
next few months), the price of gasoline rose from the start of
winter to the start of summer. Also, in seven of the last nine
years the retail price has declined during the fall, with the other
two being essentially unchanged.

And going back to 1996, you can see that the market, as
measured by the price of gasoline, has already discounted the
impact on supply and demand for the “summer driving season”
right about when summer starts! [Except for the Hurricane
Katrina shock.]

[Taking out any geopolitical or weather-related shocks, as well
as any drastic moves by OPEC on the supply front, the price of
gasoline is more about refinery output than anything else. It
also has to do with the fact this nation hasn’t built any new ones
in over three decades (though we’ve expanded capacity at
existing facilities). As the refiners undergo key maintenance in
the winter and spring, while gearing up for the switch to summer
blends in many parts of the country as mandated by state
governments, that takes a lot of supply off the table; ergo, prices
tend to rise given generally static demand.]

As I’ve pointed out in a few past Wall Street History columns,
it’s all kind of like the yearly talk of a “summer rally” in stocks.
Summer is the worst of the four seasons, in actuality, when it
comes to equity performance.

Wall Street History continues next week.

Brian Trumbore