Update:Increased Potential for Gasoline Price Spikes -- Spring & Summer

April 17, 2000

Energy Information Administration

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• The high crude oil prices of March, 2000 are expected to decline and bring gasoline prices down as well this summer. However, this assumes no price volatility.
  • Prices surge quickly when an unexpected event (e.g., unplanned refinery outage) causes demand to exceed production and imports long enough to drain available inventories to low levels.
  • The availability of nearby supply in the form of inventories or excess refinery capacity influences the magnitude and duration of any price surge.

• Gasoline inventories at the end of March have improved from last month relative to normal, but they still remain low as we enter the year 2000 summer driving season.

• EIA expects gasoline and crude oil stocks to remain low through the summer, and refineries to run at high utilization rates. This combination of factors increases the probability of price volatility during the high gasoline demand summer months.