Crude Oil and Gasoline Prices: A Timeline

Summary

Follow crude oil and gasoline price changes reflecting market conditions and events that have occurred since May 2001.

May 2001 - Tight gasoline supplies in the U.S.

Crude oil prices had risen dramatically in 1999-2000. Higher than normal demand for heating oil and winter gasoline had depleted already low inventories and prevented the traditional build-up of gasoline stocks in anticipation of the summer driving season. Extensive refinery maintenance heading into the driving season meant less crude oil could be refined into gasoline. With each successive weekly report that inventory levels were down from the previous year, fears that there would be product shortages grew, and speculators drove up wholesale gasoline prices across North America.

When the amount of available gasoline returned to adequate levels in July, prices fell but then increased again in August during a late summer surge in demand. Crude oil prices remained relatively stable throughout this period.

September 2001 - Terrorist attacks in the U.S.

Following the events of September 11th, demand for petroleum products, such as gasoline and jet fuel, plummeted as airline travel dropped off significantly and many Americans cancelled road trips. Both crude oil and gasoline prices reflected this dramatic drop in demand.

March 2003 - Iraq invasion

In the weeks leading up to the U.S. invasion of Iraq, new fears of oil supply disruptions sparked steady increases in the price of crude oil and gasoline. After the invasion, when it became clear that the market could deal with the supply disruptions, prices of both crude oil and gasoline dropped back to pre-war levels.

August 2003 - Electricity blackout

The massive electricity blackout across much of the Northeastern seaboard cut off electricity to a number of refineries in Ontario and New England. Because of the sudden shut down, some refineries took several weeks to restore operations to full production again. The disruption to the supply of gasoline drove prices up for a few days. Crude oil prices were not affected.

May 2004 - Tight gasoline supplies in the U.S.

The strong recovery of the U.S. economy created higher than expected demand for oil products and prevented refineries from building gasoline stocks in advance of the peak driving season. Gasoline inventories in the U.S. were down 2% from the previous year and were significantly lower than the five-year average. With less gasoline available, the industry had limited flexibility to respond to changes in supply or demand. Market speculators reacted to this situation by bidding up the price of gasoline.

August 2005 - Hurricane Katrina

Hurricane Katrina caused significant damage to offshore rigs, refineries, pipelines and ports in the Gulf of Mexico. Adding to the physical devastation were wide-scale electricity outages, flooding, and evacuations of oil industry employees. The immediate loss of more than 25% of U.S. refining capacity created severe shortages of gasoline and other oil products across North America. The price impacts were felt worldwide as markets struggled to re-balance and European markets tried to free up product for export to the U.S.

Although Hurricane Rita did not cause any further supply interruptions, speculation that it would lead to significant price spikes in the days leading up to its arrival on land. When the damage was assessed, prices dropped quickly to their post-Katrina levels.

Within a few weeks, supply and demand were more balanced and prices subsided somewhat. However, nearly a year later the U.S. still had not returned to full refining capacity. Gasoline markets in North America remained very tight and prices continued to be volatile.

June to September 2006 – Geopolitical Uncertainties

Heading into the summer driving season, Canadian gasoline and diesel fuel prices were already well ahead of the previous year’s levels. The persistent rise in crude oil prices in the first half of the year was influenced by a series of international events, such as the Israel/Hezbollah conflict and the Iranian nuclear program, which caused significant market instability. By the second half of the year concerns over possible conflicts in oil producing regions were reduced and prices declined upon higher inventory levels of crude oil and gasoline.

May 2007 – Impact of Refinery Maintenance and Unplanned Outages

The rise in retail gasoline prices in the first half of 2007 was primarily the result of tight supply. Unusually extensive North American refinery outages in the early part of the year, combined with the rising summer demand, caused prices to increase much earlier in the season. In the latter part of the year, pump prices were influenced by the significant rise in crude oil prices. The most influential event affecting crude oil prices was the significant depreciation of the U.S. currency.

January to July 2008 – Rising World Crude Oil Prices

World crude oil prices registered record highs. Oil prices pushed upward on strong world economic growth leading to increased demand for oil. In addition, moderate non-OPEC supply growth and the increased participation of non-commercial traders into the commodity oil market further increased prices.

August to December 2008 – Falling World Crude Oil Prices

World crude oil plummet triggered by the U.S. subprime mortgage crisis, a dramatic rise in mortgage delinquencies and foreclosures in the United States, creating major adverse consequences for banks and financial markets around the globe resulting in a major recession and falling petroleum product demand. Gasoline prices followed suit, except for a short spike in during the Hurricanes Gustav and Ike’s event.

January to October 2009 – Gradual Recovery in Crude Oil and Products Prices

Prices recovered gradually in 2009 upon signs of improving economic conditions. However, crude oil prices were moderated by growing U.S. inventories of crude oil and petroleum products along with uncertainties as to the timing of the economic recovery.