Fuel markets poised to close out 2022 at lowest levels of year
By Nicole Pollack
Via- Wyoming News Exchange
CASPER — It’s been a little more than a year since utilities began stockpiling coal in preparation for a costly winter.
The subsequent months proved especially volatile for energy markets, which were still recovering from the pandemic when international conflict rattled them further.
But this Christmas weekend, fuel prices are poised to close out 2022 at some of their lowest levels all year, easing the costs of holiday travel — and making it less expensive to stay warm through the week’s bitter cold.
Regular gasoline in Wyoming averaged about $3.36 per gallon ahead of last Christmas. Diesel was about $3.72 per gallon at the time.
After shattering the state’s old price records this summer as oil prices spiked (not accounting for inflation), gas had dropped to $2.91 per gallon statewide, and to $2.20 in Natrona County on Friday, according to AAA.
With a 14-cent drop over the previous week, Wyoming saw one of the country’s largest weekly price reductions, AAA reported Thursday.
The price of diesel is declining more slowly, due largely to persistent supply-chain bottlenecks. It had fallen just over a dollar from its June 29 high to $4.68 as of Friday.
Oil markets — the primary factor influencing gas prices — climbed almost continuously between the summer of 2020 and the summer of 2022, according to Insider. They’ve since begun to decline.
U.S. benchmark West Texas Intermediate hovered in the ballpark of $75 per barrel during a temporary price dip last Christmas. It peaked above $120 per barrel in early June.
On Thursday, it closed at $77.49 per barrel — a price consistent with the downward trend that’s emerged over the last six months.
Natural gas, meanwhile, spiked multiple times this year to above $8 per million metric British thermal units, according to Insider, in an abrupt departure from the below-$3 prices U.S. consumers (and utilities) enjoyed for several years prior to the middle of 2021.
Until last year, coal from the Powder River Basin remained dependably between $8.25 and $13.25 per ton. In November, as utilities scrambled to secure a substitute for suddenly-very-expensive natural gas, that same coal shot to $30.70 per ton, according to federal data.
While it’s come down substantially since then — holding at $15.60 as of last week — the price of that coal is still higher than at any point in the previous decade.
The aftermath of the pandemic and the conflict between Russia and Ukraine are “having real effects on our state revenues,” Rob Godby, an economics professor at the University of Wyoming, told the Star-Tribune in March, “and the longer this goes on, the greater that effect will be.”
That’s still the case.
In an interview this month, Godby likened Wyoming’s economy to a three-legged stool. Those legs represent coal, oil and natural gas.
“Different years, they make up different proportions of the total, but it’s easiest to think of those being each kind of a third,” he said.
Recovering oil and natural gas production since the first half of 2020, a temporary boost at coal mines and a spike in the prices of all three commodities brought a windfall to the state this year. In its October forecast, Wyoming’s Consensus Revenue Estimating Group announced that the state earned $329.4 million more than expected during the
last fiscal year. Mineral revenue played a major role.
“Strong oil and natural gas prices in the second half of fiscal year (FY) 2022 significantly outpaced CREG’s forecast and contributed to higher-than-expected revenue collections for the state’s primary operating accounts,” the report said.
It noted that the increased mineral revenues “have been driven almost entirely by higher prices rather than changes to statewide production of oil, natural gas, and coal.”
The boost is likely to continue into 2023.