Low- sulfur distillate stocks, which represent diesel inventories, generally are not below the normal range. But because diesel fuel can be used to serve heating oil markets, diesel prices tend to follow heating oil prices during the heating season. As we saw last winter on the East Coast, a price run-up in the heating oil market can spill over to diesel prices. Gasoline markets are generally improving. We have passed the high demand, high production summer period and are now using the winter formulation gasoline, which is easier to produce than the summer formulation.
Inventories are now in the normal range.
However, temporary regional problems could still occur, such as those sometimes seen in California, when supply difficulties such as unanticipated pipeline or refinery shutdowns arise. On average, EIA expects gasoline prices this winter to be about 7 cents per gallon higher than last winter mainly reflecting higher crude oil prices. Summary In summary, we are in the midst of a year of volatility for crude oil, refined products, and natural gas. As we begin the winter heating season, prices for all heating fuels are higher than last year, and inventories are low. Although increased world crude production should begin to help markets build inventories back toward normal levels, the process likely will be slow, and petroleum inventories worldwide are likely to remain low into 2001.