Crude Oil Prices will continue to decrease, taking a dive in November and December when refiners will
   draw down inventories at the year's end. At the current pace, world production will not be curtailed enough
   to correct prices this year. Demand for refined products, and thus for crude oil, will sustain prices during
   summer months, but after August, there will be no support and prices will drop. Refiners' preference for
   light, sweet crude oil will result in an increasingly wider margin between those crudes and heavy, sour
   crudes.

   Two gasoline forecasts are provided, one for the East Coast, and one for the West Coast, primarily
   California. These two markets are separate and distinct. Therefore, the pricing will continue to move
   separately, depending on the supply and demand in each region. Go to the graphs page to see the gasoline
   forecast. 

   For additional information about these longer term forecasts, please check out Tip #7 on the Background
   Tips Page.

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   Last week, U.S. refiners added yet another 5 million barrels of crude oil to inventories, which increased from
   336.6 to 341.6 million barrels. Virtually all of the additional crude oil was added to PAD 3 storage. Crude oil
   input to refineries increased from 14.7 to 15.4 million barrels per day. Refineries are operating at 98.5%
   utilization.

   While the U.S. currently has larger than usual supplies of crude oil in storage, there is no reason to become
   complacent about security. The U.S. only supplies about 40%, or 6.3 million bpd of crude oil required by its
   refineries. Thus, if we had to depend on our inventories and local production (excluding the strategic oil
   reserves), we would have enough crude oil to last a maximum of 37.5 days. 

   Gasoline and distillate production increased in every region except PAD 5 where California refineries held
   inputs steady and drew down inventories.

   East Coast Gasoline and Heating Oil

   East Coast - Input to crude stills increased in PADs 1,2 and 3 and decreased slightly in PAD 4. Overall,
   refinery utilization is near 100% in these regions. Production of products exceeds demand. Gulf Coast
   inventories of gasoline rose by 1.3 million barrels to a level of 66.2 million barrels.

   Heating oil inventory levels on the East Coast (PAD 1) increased from 45.4 to 46.5 million barrels, an
   addition of stocks not necessarily needed this time of year.

   Prices of gasoline and diesel will remain low throughout the summer, and probably to the end of the year
   for areas east of the Rockies.

   West Coast Gasoline and Diesel Forecast

   West Coast - Crude oil input to West Coast refineries remained at 2.57 million barrels per day. Production
   of products was unchanged and inventories of gasoline were drawn down to 27.4 million barrels. At the
   current demand of 2.76 million bpd, the West Coast has approximately 10 days supply in inventory.
   Because supply is tight, West Coast gasoline prices will continue to rise throughout the summer. 

   West Coast diesel inventories increased to 12.8 million, the highest level since December, 1996. At a
   demand rate of .37 million bpd, the West Coast has approximately 35 days supply of diesel. There is no
   real explanation for why diesel prices are so much higher than gasoline on the West Coast other than
   that consumers are willing to pay the price.

   Total refinery capacity in PAD 5 is 2,964,900 barrels per day. Input was 2,574,000 bpd, or 87% capacity.

   Imports

   Imports - Gasoline imports remain high at 520 thousand bpd, while imports of distillate dropped from 235
   thousand to 92 thousand bpd.