Environmental Services Division
Energy and Waste Management Bureau

For Immediate Release
         April 17, 2007
DNR Contact:  Brian Crowe 515-251-8518
 
Gasoline Prices Continue Climb in Iowa
Iowa gasoline prices continue to climb across the state as crude oil
inventories remain low and market speculation has driven the futures
market higher in recent weeks. Traditional summer price spikes have come
early this year for Iowans. Refineries are performing scheduled
maintenance tasks and other refineries have experienced unexpected
production delays due to fires and mechanical issues. Meanwhile, lower
supply and higher demand worldwide have contributed to a decrease in
U.S. supply. Prices in Iowa are up $0.25 per gallon on average in April
to $2.71 per gallon of mid-grade gasoline blended with 10 percent
ethanol. That is just over a 9 percent increase over last month’s
average of $2.47 per gallon of the same blend. Iowa prices are up 28%
since their 2007 low in January of $2.11 per gallon, and Iowans are
paying $0.06 more per gallon of gasoline than this time last year when
prices were $2.65. Iowa is still $0.17 below the national average of
$2.88 per gallon; nationally prices are $0.09 higher per gallon than one
year ago.

“The higher prices continue as speculation increases as to how much
gasoline will cost when the demand reaches its peak this summer,” said
Brian Crowe, an Iowa Department of Natural Resources Energy Analyst.
“We know that prices will peak.  Some analysts believe that we have
hit our peak for the year, but that assumes no weather or politically
related supply interruptions.  If refineries get back on track and can
produce large volume, and there is not a supply interruption, hopefully
we will see a stabilized price.”

Heavy investor speculation in world markets has driven fuel prices
increasingly higher in recent weeks mostly due to summer demand
estimation. The summer driving season, which traditionally begins
Memorial Day weekend (the last Monday in May) through Labor Day weekend
(the first Monday in September), has traditionally produced 10%
increases to gasoline prices over the past ten years. Investors are now
speculating whether production will meet the increased summer gasoline
demand and if prices will level off or continue to increase. Refineries
traditionally slow down production for refinery maintenance in the
spring for ramped up production and demand in the summer. Heavy market
speculation continued in April as the Organization of Petroleum
Exporting Country’s ongoing production cuts have led to national price
increases. Because of what they termed “oversupply,” OPEC’s 12
member nations agreed upon cuts in production of 1.7 million barrels a
day in meetings in October and December of 2006. The actual production
decreases have been around 1 million barrels a day, cutting the
organization’s worldwide daily output to 30.2 million barrels crude
oil.    

United States crude oil stocks rose to 333.4 million barrels in April,
and have remained steady in recent weeks.  In the first quarter of 2007,
crude stock supply had steadily dropped to the 3 year low reported last
month when crude stocks dipped by 4.8 million barrels to 324.2 million
barrels. Even with higher stock numbers in April, crude stocks are still
13 million barrels lower than then they were at this point last year.

On April 16, natural gas was trading at $7.53/MMBtu, $0.01 higher than
last month, but $0.19 lower than the price of natural gas at this time
last year, a 2.5 percent decrease.

A survey completed by the Iowa Department of Natural Resources on April
17th indicated that the average retail price of heating oil in Iowa was
$2.57 per gallon, $0.19 higher than last month and $0.67 higher than the
price of heating oil at this time last year, largely due to crude oil
supply reductions.  The same survey found that propane was selling for
an average of $1.52 per gallon across the state, $0.02 higher than a
month ago, and $0.26 higher than the $1.26 price at this time last year.