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KLMNO WASHINGTON BUSINESS The ups and downs of prices at the pump
Gas fluctuations reflect turbulence in global energy markets
by Sonja Ryst Filling your tank for your sum-
mer vacation costs less than it did a few months ago but more than it did last year, confounding mo- torists planning their getaways and highlighting the recent tur- bulence in global energy markets. In July 2008, U.S. gas prices hit record highs, scaring drivers away from the pumps. A year lat- er, the financial crisis caused prices to tumble, but the reces- sion and rising unemployment made people reluctant to open their wallets. Prices rose early in 2010 as demand picked up but dropped in recent months on re- newed fears about the economy. Software sales executive James Cole is getting fed up with the constant changes. When Cole drove to his timeshare at Massa- nutten Resort three weeks ago, he paid $2.99 a gallon for premium gas at a station blocks from his home in the District. He’s noticed that the price has slipped to $2.93 in recent days but remembers seeing it as high as $3.24 this year. “It fluctuates a lot,” Cole said.
“The instability in rates — that causes a lot of consternation for everyone, no matter the income strata, in terms of how you’re go- ing to manage your money.” On Thursday, the average U.S. price for a gallon of regular gaso- line was $2.72, according to the auto club AAA’s daily fuel gauge report. That’s down this year’s high of $2.93 on May 6 but up from $2.50 a year ago. The U.S. Energy Information Administra- tion (EIA) provides similar infor- mation that can vary slightly be- cause of differences in methodol- ogy.
Gas prices once rose predict-
ably at the start of summer, as Americans wheeled off en masse for vacations. Today, fuel vendors and industry analysts say, global markets have a more direct effect on the prices that U.S. drivers pay at the pump, with events includ- ing hurricanes and rumors about Nigerian oil fields contributing to near-hourly fluctuations. Paul Leonard, a fuel buyer at Carroll Independent Fuel, a Balti- more-based distributor, said he came in to work Tuesday morning and watched the wholesale price
2 $2.72 07/10 1 0 2006 2007 SOURCE: U.S. Energy Information Administration
of gasoline rise nearly 6 cents in just a few hours. “It’s not even noontime and we’ve already had numerous
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Daily Stock Market Performance Index
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1096.48 +0.1 –1.7 2249.08 0.0 –0.9 2008 2009 2010 THE WASHINGTON POST
price changes today,” said Leon- ard, whose company sells gaso- line, diesel, fuel and heating oil to gas stations and other businesses.
$1.61 12/08
With the tough economy, demand was low and prices plummeted.
Market worries have led to a recent drop.
“The instability . . . causes a lot of consternation
for everyone.” — James Cole, D.C. resident
Thursday. In Baltimore it was $2.65, and in Roanoke it was $2.50, according to AAA. Some drivers are factoring those differences into their travel plans. Chuck Crowders, a retiree from
XIAOMEI CHEN/THE WASHINGTON POST
Kristie Corboy says her family owns four vehicles and spends about $200 on gas per week. Gas is cheaper than it was a few months ago — but still more than it was a year ago.
Filling up for more, then less
Though U.S. gas prices are influenced by a range of factors, market instability has contributed to more volatility in recent years.
Price of regular gasoline per gallon
$5 4 3
In the past, prices were more influenced by summer travel.
$4.11 07/08
Gas reached its highest recorded price in 2008.
$2.91 05/10 As demand picked back up, so did prices.
“We’ve already had numerous price changes
today.” — Paul Leonard, fuel buyer
He was wary of predicting where prices were headed for the rest of the summer. “It’s been very erratic,” he said.
“It seems that as time goes on, it becomes more and more erratic.” Many analysts had thought ear- lier this year that prices would be higher by now. One factor holding prices down has been the in- creased concern that the U.S. eco- nomic recovery is stalling. “One of the few upsides we can look to from the [global economic worries] is that the retail gas prices have been surprisingly low this summer,” said Jason Schenk- er, president and chief economist at Prestige Economics in Austin. Gas costs vary depending on where you fill up. In the District, which has higher gasoline taxes than most states, the average price was $2.76 per gallon on
THE MARKETS 10,359.31
Close %Chg –0.1
Daily
%Chg –0.7
YTD
Industry Group Real Estate Mgmt & Dev Capital Markets Multiline Retail Tobacco
Health Care Providers Air Freight & Logistics Consumer Finance Metals & Mining
Construction Materials Construction & Engineerng
S&P 500 Industry Group Snapshot Daily
%Chg 1.59 1.47 1.41 0.87 0.84
–0.92 –1.01 –1.03 –1.33 –1.39
International Stock Markets Daily
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Asia Pacific J A S O N D J
Company 3M
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AmExp AT&T BoA
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Dow Jones 30 Industrials Daily
Close 83.06
10.84 43.43 25.00 15.39 64.37 66.51 73.04
Cisco Systems 23.92 Coca-Cola DuPont
52.85 37.17 59.27 15.25
Home Depot 28.34 HP
47.42
%Chg %Chg 0.0
–0.6 –32.8 –0.6
YTD 0.5 7.2
–1.8 –0.6 –0.3 0.0 0.8 0.1 0.2 0.0 0.3 0.2 0.2
Other Measures Index
0.2 –10.8 2.2
18.9 16.7 –5.1 –0.1 –7.3 10.4
–13.1 0.8
–2.0 –7.9
Close
DJ Total Stock Market Index 11,406.72 Russell 2000
634.62
Post-Bloomberg DC Area Index 184.49 CBOE Volatility (VIX)
25.14 F M A M J
Company IBM
Intel J&J
JPMorgCh Kraft Foods McDonald's Merck
Microsoft P&G Co Pfizer
Travelers
United Tech Verizon
Wal-Mart
Close 130.72
21.51
60.26 40.46 29.32 71.33 36.49 25.51 62.73 14.87 50.30 68.15 26.80 50.41
Walt Disney 34.05 Daily 0.7
–0.6 0.3 0.0 0.6 0.8 0.3 0.1 0.2
–2.1 0.2
–0.1 0.1
–0.6 J
%Chg %Chg 0.0
YTD –0.1 –6.4
14.2 –0.1
–16.3 3.5
–18.3 0.9
–1.8
–13.4 –5.7 5.6
Daily%Chg YTD%Chg 0.0
–0.9 –0.3 1.0
–0.8 1.5
–1.5 16.0
Australia (ASX 200) China (CSI 300) Hong Kong (Hang Seng) Japan (Nikkei)
4442.60 2608.52
20,255.62 9685.53
Cross Currency Rates EU €
US $ 5.4
–2.9 7.9
US $ per EU € per
Japan ¥ per Britain £ per Brazil R$ per
Canada $ per Mexico $ per
0.7726 87.3600 113.0700
0.6469 0.8373 0.0074 1.7645 1.0384
12.7714
Interest Rates Consumer Rates
Money market funds 6-Month CDs 1-Year CDs 5-Year CDs New car loan Home-equity loan
0.75 0.81 1.14 2.48 6.19 7.37
2.2839 0.0202 1.3441 0.0119 16.5311 0.1460
–0.4 –1.7 –1.5 –1.1
Japan ¥
1.2944 0.0114 0.0088
Britain £
1.5459 0.5667 1.1943 0.4378
Brazil R$ Canada $ Mexico $ 0.9631 0.0783 0.7440 0.0605
135.0500 49.3225 84.1300 6.8400 0.3666
2.7279 1.6052 0.5884
0.6230 0.0507 1.6994 0.1382 0.0813
19.7428 7.2380 12.2991 Close
63,489.37 11,741.77 32,381.06
252.97
3581.82 6149.36 5211.29
%Chg 0.0 1.0 0.2
–1.2 –1.4 –1.0 –0.8
YTD%Chg –30%
–2.0% 0 +2.0%
Commodities Futures
Copper Corn
Crude Oil Gold
Natural Gas
Ashburn, drove about 10 hours to a yearly family reunion in Lexing- ton, Ky., a few weeks ago. He and his three daughters, son-in-law, grandson and wife piled into two cars, one starting from Ashburn and the other from Maryland. But gas in the Washington region was so pricey that Crowders called the others on his cellphone and rec- ommended that they hold off on refueling until they had left the area. In 2008, Crowders and his fam- ily had planned to attend the re- union but decided against the trip because gas prices were so high. “This year they were perfect,” Crowders said. “Well, maybe not perfect, but much lower.” The volatility hasn’t kept peo- ple from driving. During the July Fourth weekend, gasoline con- sumption was 2.1 percent higher than in the comparable period last year, according to Master- Card SpendingPulse, which tracks nationwide payment pat- terns. “We’re digging ourselves out of the hole, but we’re not anywhere near the growth of pre-recession times,” said John Gamel, director of economic analysis for Master- Card SpendingPulse. What happens next, of course,
is anyone’s guess. The EIA said gas prices will rise to $2.82 a gal- lon in September, assuming that there’s an increase in economic activity and that crude oil prices slowly rise.
Drivers should also keep an eye on the weather: The National Oceanic and Atmospheric Ad- ministration expects this year’s hurricane season to be busier than usual. If refiners have to shut down production, that could cause prices to rise. “The real test of all this will come in August,” said John B. Townsend II, manager of public and government affairs for AAA. “That’s when most people travel.”
rysts@washpost.com
LOCAL DIGEST HOSPITALITY
Marriott outlines plan to raise rates Marriott International said
Thursday it plans to raise room rates in the coming months, as demand from travelers picks up. The plan follows the release late Wednesday of third-quarter re- sults that surpassed analysts ex- pectations. “The resurgence of corporate booking will likely yield higher room rates by the end of 2010,” Arne Sorenson, president and chief operating officer of the Bethesda-based hotel giant, said during a conference call with analysts.
“Our optimism is not so much driven by this quarter’s numbers as it is by the prospects of the next few years.” Many analysts were anticipat-
ing that hotel companies would lower earnings estimates in re- sponse to general economic un- certainty. Instead, Marriott upped its full-year outlook, with expectations of a 4 percent to 6 percent increase in revenue per available room — a key industry measure of profit.
— Danielle Douglas, Capital Business
CONTRACTING
Lockheed, Sikorsky in joint Air Force bid Lockheed Martin and Sikorsky
Aircraft will submit a joint bid to replace a fleet of 112 search-and- rescue helicopters for the Air Force, the companies said Thurs- day. The aircraft will be a version of
Sikorsky’s UH-60M Black Hawk. Sikorsky, a division of United Technologies, will be the prime contractor while Bethesda-based Lockheed will be the major sup- plier of the systems used on- board.
— Associated Press
FRIDAY, JULY 16, 2010
On Mondays, The Washington Post offers Capital Business, a weekly publication covering the region’s business community. A one-year subscription costs $49 and is available only to Post subscribers. Visit
washingtonpost.com/ capitalbusiness for more details.
Data and graphics by
$3.0050 $3.9250
Close %Chg +0.1 +2.1
Daily
Orange Juice Silver
$1208.30 $4.59
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Value of $1000 invested for the past: Daily
0% +30%
Exchange-Traded (Ticker) %Chg Coffee (COFF.L) Copper (COPA.L) Corn (CORN.L) Cotton (COTN.L) Crude Oil (CRUD.L) Gasoline (UGAS.L) Gold (BULL.L)
1.3
–0.1 2.5
Natural Gas (NGAS.L) Silver (SLVR.L)
Gainers NBTY Inc
–1.8 –1.8 –2.0 –0.4 5.3
–0.6
Gainers and Losers from the S&P 1500 Index Daily
Close %Chg $53.74 43.4
GreenMountainCoffee $28.65 6.0 Air Methods Corp
$32.37 5.7
Comstock Resources $27.50 5.4 KingPharmaceuticals $8.77 5.3 Kid Brands Inc Fairchild Semico Goldman Sachs
Intrepid Potash Inc
Gentiva Health DineEquity Inc E*Trade
SUPERVALU Amedisys Inc
Tenet Healthcare CF Industries Motorola
priceline.com
0.52% 0.25% 3.25%
Bank Prime Federal Funds LIBOR 3-Month
30-Year fixed mortgage 15-Year fixed mortgage 1-Year ARM
3.19% 4.13% 4.61%
10-year note Yield:
5-year note Yield:
2.98 1.75
4:30 p.m. New York time.
Whole Foods Market $38.99 4.4 Dean Foods
$11.71 4.1 4.4
$22.89 4.1 $34.72 4.1 $13.58
$222.61
$11.43 3.9 $26.76 3.9 $4.75 3.7 $77.96 3.5 $7.72 3.5 3.4
$8.17 5.0 $10.25 4.6 $145.22 4.4 $23.22 4.4
Losers
Kulicke & Soffa Mannatech Inc Live Nation Ent Nautilus Inc
Veeco Instruments Standard Register TCF Financial Corp StarTek
Liz Claiborne eHealth Inc
Pinnacle Financial LCA-Vision Websense PolyOne Skyline McAfee
Zale Corp
EW Scripps HOT Topic Arctic Cat
2-year note Yield:
6-month bill Yield:
0.60 0.19
Note: Bank prime is from 10 major banks. Federal Funds rate is the market rate, which can vary from the federal target rate. LIBOR is the London Interbank Offered Rate. Consumer rates are from Bankrate. All figures as of
Close %Chg $6.95 –13.0
Daily
$2.06 –11.6 $10.19 –10.8 $1.84 –8.0 $38.46 –6.6 $3.23 –6.1 $16.57 –5.4 $4.29 –5.3 $4.71 –5.2 $10.99 –4.8 $13.33 –4.7 $5.25 –4.5 $20.23 –4.4 $8.82 –4.3 $18.13 –4.3 $31.02 –4.2 $1.60 –4.2 $7.76 –4.1 $5.18 –4.1 $9.69 –4.1
Treasury Performance Over Past Three Months
Soybeans Sugar Wheat
$800
Close %Chg $1.3810 –0.5 $18.35
Daily
$10.1900 $0.1739 $5.9625
day $1000
+0.4 +2.2 +2.5 +6.7
month $1200
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