The average price for gallon of regular unleaded in Virginia is at $1.95 this morning, unchanged from a week ago. Crude oil prices ended last week slightly above $50 to close at $53.20 Friday. Corporate earnings reports, a strengthening dollar, growing oil and gasoline inventories and Chrysler heading to bankruptcy all factored into setting the long term price of oil. However, ultimately it was the growing concern over the spread of the H1N1 virus, commonly known as swine flu, and its potential for driving down summer travel that helped keep oil prices down this week.
The U.S. Energy Information Administration (EIA) reported crude supplies rose 4.1 million barrels, about double the expectation, and gasoline stocks fell 4.7 million barrels, much more than analysts had expected. The EIA also reported that gasoline demand for 2009 is only 4,000 barrels per day below the same period one year ago. In addition, the EIA strengthened its forecast for 2009 gasoline demand, estimating it would register about 50,000 b/d or 0.6 percent higher compared to 2008.
Also last week, Exxon Mobil announced that its net income fell 58 percent in the first-quarter as demand for energy slumped and the Federal Highway Administration estimated cumulative travel for 2009 has fallen 8.6 billion vehicle miles, or 1.9% compared to the same 2008 period.
“Could the flu affect gas prices? Not directly, but it could affect demand for gasoline if people decide to travel less. The potential impact of the H1N1 virus on spring and summer travel will remain a focus in the days ahead,” said Martha M. Meade, manger of public and government affairs for AAA Mid-Atlantic. “With a slow global and national economy, most indications point to gas prices remaining fairly close to where they are right now, come summer.”
– Staff Report
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Chris Graham
