ZOOM ON THE WORLD ENERGY

The crude oil price for Q407 increased 54 percent relative to a year earlier while the price of natural gas increased 6 percent. The U.S. refiner average acquisition cost of imported crude oil increased from $53.39 per barrel in Q406 to $82.44 per barrel in Q407.This is the twentieth time in the past twenty-two quarters (i.e., five and one-half years) that the price of crude oil was higher relative to the year-earlier quarter. (The first and second quarters of 2007 were the only exceptions since the second quarter of 2002.)

The average U.S. natural gas wellhead price increased from $6.02 per thousand cubic feet (mcf) in Q406 to $6.38 per mcf in Q407. Natural gas prices have generally declined over the past year and one-half and this is only the second time that they have increased relative to the year-earlier quarter since the second quarter of 2006.

The gross refining margin (the per-barrel composite wholesale product price less the composite refiner acquisition cost of crude oil) was about 1 percent lower in Q407 than in Q406. A large increase in the average price for petroleum products (from $68.67 per barrel to $97.50 per barrel) was exceeded by an even larger $29.05 per barrel increase in the price of crude oil resulting in a slightly lower margin.

Comparing 2006 and 2007, the changes in the yearly averages for the prices were far more modest as the crude oil price increased by 23 percent and the natural gas price fell by less than 1 percent. However, the change in the annual average gross refining margin was greater than that of the fourth quarter, increasing by 3 percent.