Up or Down...
Where Are Gasoline and Diesel Prices Headed?

In mid-June 2006, the Energy Information Administration and other analysts expected gasoline prices to fall somewhat over the course of the summer. One of the main factors supporting this view is that average wholesale gasoline margins Since March, Gasoline Wholesale Price Margins Have Been Higher Than In Recent Years have been significantly higher than in recent years beginning mid-March 2006. Historically, the margin has been less than 40 cents a gallon. Earlier this year, the margin went above 60 cents a gallon. The wholesale margin has never been this high in recent years, except during the aftermath of Hurricanes Katrina and Rita last fall, and in May 2004. However, other analysts see a different outcome for gasoline prices this summer. These analysts believe continued tightness in gasoline markets will lead to wholesale margins staying at elevated levels, or possibly increase some during this summer.

Record gasoline imports have kept inventories from being even lower and some market observers think gasoline imports may not continue at such strong volumes. If not, this would put increased pressure on domestic refiners and blenders to keep volumes high enough to supply the expected increase in demand during July and August, 2006. This scenario would likely lead to wholesale margins remaining high, or perhaps going higher, especially if unplanned refinery outages occur during the summer.

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Be sure to check the Nebraska Gasoline Price Monitor at the Energy Office’s web site for the latest information on prices and supplies as well as tips on reducing fuel use.

About Those Prices
The Nebraska Department of Justice’s review of gas pricing, Report of the Attorney General’s Task Force on Motor Fuel Pricing in Nebraska, was completed in January 2006 by three university professors, Ernest Gross, Creighton University; Edward Morse, Creighton University; and Eric Thompson, University of Nebraska Lincoln.

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