CAMARILLO, Calif. -- For the first time since mid-January, retail gasoline prices have dropped. In the three weeks from May 18 to June 8, self-serve regular dropped 7.37 cents to a U.S. average $3.1090, according to the most recent Lundberg Survey of approximately 7,000 U.S. gas stations.
Not from crude; its prices have been comparatively stable. This seven cents is thanks mostly to what is becoming a world market for gasoline, a market sending volumes to exploit high U.S. prices at a time when [image-nocss] the domestic refining industry is still struggling toward maximum capacity use to fulfill Summer gasoline demand. A boggling volley of extended repair and maintenance projects joined by accidents including explosions and fires brought the U.S. retail regular grade price to its all time high price of $3.1827 on May 18, even beating its true historical high of March 1981 (in today's dollars) by three cents per gallon.
Spring 2007 is a milestone in our gasoline history not only because of price. Inflation adjustment, properly done using the current consumer price index data, the right grade(s) and credible historical price, reveals the importance of May 18.
Another scary milestone established three weeks ago is this Spring's manifestation of decades of economic hostility to domestic refining capacity expansion on environmental grounds in the form of at least 35 gasoline output snags that were not mere pre-Summer tuneups, culminating in a loss of about 8% gasoline supply on May 18.
A third milestone may also reveal itselfin a sudden public realization that the U.S. is, absent a turnaround in anti-refining mentality, fast becoming more gasoline-import dependent. A net importer of crude, we are on our way to being a net importer of refined product. It's pretty well known that our youngest refinery is 31 years old, but what may not be as well known is that we're exporting our capacity to the rest of the world. We now must bring in about 12% of our needs, up from 2% to 3% in the 1980s. Lundberg Survey projects our dependence on foreign gasoline to be well over one-third of total demand by 2030, with no end in sight.
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