By Brai Odion-Esene

WASHINGTON (MNI) – Despite high gasoline prices, the volume of
Americans hitting the road during this year’s summer driving season will
not change significantly, the chief economist for the American Petroleum
Institute said Thursday.

With the Memorial Day weekend around the corner, kicking the summer
driving season fully into gear, John Felmy noted during a conference
call with reporters that gasoline demand was down 2.2% year-over-year in
April “and continues to be weak, especially in the urban areas.”

Nevertheless, that does not change the fact that driving by car for
a family of four “is the cheapest vacation you can have,” he said.

So while there might be some marginal changes in summer driving
figures, “people are still going to take their vacations,” he continued.
“The economy is still on a positive bend even though the GDP number was
unchanged.”

The API reported in its monthly statistics report last week that
gasoline demand in April declined for the first time in three months on
a year-over-year basis.

“So what you have is a relatively weak situation that is consistent
with the relatively weak economy that we have,” Felmy said.

U.S. real GDP increased at an annual rate of 1.8% in the first
quarter of 2011, according to the “second” estimate released by the
Bureau of Economic Analysis Thursday.

The increase in the first quarter real GDP primarily reflected
positive contributions from personal consumption expenditures, private
inventory investment, exports, and nonresidential fixed investment that
were partly offset by negative contributions from federal government
spending and state and local government spending.

In its most recent projections published earlier this month, the
Energy Information Administration forecast regular-grade motor gasoline
retail prices to average $3.81 per gallon during this summer’s driving
season, up from $2.76 per gallon last summer. The EIA’s forecast for the
U.S. monthly average regular gasoline price during the summer peaks in
June at $3.88 per gallon.

Gasoline prices are currently witnessing a slight decline, matching
the retreat in crude oil prices to just below $100 per barrel. After
averaging close to $4.00 per gallon at the beginning of May, the EIA
reported that gasoline prices in the U.S. averaged $3.85 in the May 23
week.

The refinery system is producing “a record amount” of finished
gasoline, Felmy noted, and in terms of inventories, gasoline stocks are
above average and slightly below last year.

And despite being ravaged by severe weather in recent weeks, the
gasoline situation in the Midwest seems to be adequate, Felmy said,
noting that inventories in the Midwest actually increased last week.

Giving his outlook for refinery utilization, Felmy said refinery
utilization rates are down “somewhat” given weak demand and a mandate
from the government requiring refiners to blend an absolute level of
12.6 billion gallons of ethanol with gasoline this year — part of
efforts to promote greater use of ethanol.

“It basically squeezes out some of the base gasoline that’s needed
to meet finished gasoline demand,” he said.

** Market News International Washington Bureau: 202-371-2121 **

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