Oil Rig Counts Increase
Baker Hughes reported that the number of rigs drilling for oil in the United States has recovered since the low levels seen in June 2009. The rig count surpassed its previous post-1993 peak of November 2008 on February 1, 2010 (see Figure) and was 5 percent (24 rigs) higher as of March 12. Half of the overall increase in rig counts since June 2009 has been in the Permian Basin of West Texas, where rigs drill primarily conventional vertical wells. Just under one-fifth of the increase has occurred in the Williston Basin, straddling Montana and North Dakota, where horizontal drilling programs have rapidly increased production from the Bakken Shale. (These two areas also accounted for about two-thirds of the drilling during the previous peak in 2008.)
The increased use of horizontal drilling has been an important aspect of the natural gas industry in recent years. For oil, rig counts for vertical and horizontal drilling today are little changed from the 2008 peak. In percentage terms, horizontal oil rigs dropped more than both vertical and directional drilling during the drilling decline. They also increased more in percentage terms during the recovery. The overall result is that horizontal rigs accounted for 32 percent of the total oil rig count at the November 2008 peak; as of most recent data on rig type (February 5, 2010), they accounted for 30 percent.
U.S. Average Retail Gasoline and Diesel Prices Increase Again
For the fourth week in a row, the U.S. average price for regular gasoline increased. The average moved up about four cents to $2.79 per gallon and was $0.88 above last year at this time. The cumulative increase during the past four weeks amounts to 18 cents per gallon. Prices rose in all regions of the country, with the increases ranging from two cents to nearly five cents per gallon. The averages on the East Coast, in the Midwest, and on the Gulf Coast increased about four cents to $2.78 per gallon, $2.74 per gallon, and $2.69 per gallon, respectively. The price in the Rocky Mountains rose nearly five cents to $2.73 per gallon. The West Coast average grew by more than two cents to $3.01 per gallon while the California price increased a cent and a half to $3.06 per gallon.
The U.S. average price for diesel fuel also went up for the fourth consecutive week. The increase of two cents moved the average to $2.92 per gallon, $0.91 above the year-ago price. The East Coast, Midwest, and Gulf Coast prices rose by about two cents to settle at $2.95 per gallon, $2.90 per gallon, and $2.90 per gallon, respectively. The Rocky Mountain region tallied the largest increase, over three cents, to settle at $2.92 per gallon. The West Coast price was slightly higher at $3.01 per gallon and the California average moved up a penny to $3.07 per gallon.
Propane Stock Decline Levels Off
Total U.S. propane inventories experienced their smallest decline since October 2009, drawing 0.2 million barrels to bring stocks to 25.1 million barrels. The East Coast region was the only area of the country with a decline in inventory, drawing 0.3 million barrels. The Midwest, Gulf Coast, and Rocky Mountain/West Coast regions were all up slightly. Propylene non-fuel use inventories increased their share of total propane/propylene stocks from 8.5 percent to 8.7 percent.
Residential Heating Oil Prices Increase
Residential heating oil prices increased during the week ending March 15, 2010. The average residential heating oil price gained 1.0 cent per gallon to reach 292.9 cents per gallon, 76.9 cents per gallon higher than the same time last year. Wholesale heating oil prices inched downward 0.6 cent per gallon to reach 218.3 cents per gallon, 90.0 cents per gallon higher than at this time last year.
The average residential propane price decreased 2.6 cents per gallon to reach 262.3 cents per gallon. This was an increase of 40.0 cents per gallon compared to the same period last year. Wholesale propane prices fell 7.2 cents per gallon to reach 123.7 cents per gallon. This was an increase of 50.8 cents per gallon when compared to the March 16, 2009 price of 72.9 cents per gallon.
These prices come from the last survey done for the 2009/10 winter heating season. Weekly retail prices for heating oil and propane will restart for the 2010/11 season beginning in October 2010.