U.S. gasoline prices raced above $2.00 gal last week, and were just below $2.05 gal on this penultimate day of March. The rise above $2.00 gal reminds me of the Y2K scare, but I suspect some reporters, pundits, and countrymen will liken it to the assassination of  Archduke Franz Ferdinand that preceded the Great War.

   In other words, this is not a stepping stone that will lead to 2009 prices of $3.00 gal, $3.50 gal, or $4.00 gal unless you include airport rental car returns, Catalina Island, and Martha’s Vineyard in your gasoline price universe.

   Today, wholesale gasoline prices actually dropped by more than 10cts gal, but this Monday drop represents just a bit of breathing room for marketers who have generally had a miserable 2009 to date. To a great extent, many elements of the supply chain have been “uncomfortably numb” in January, February and March.  I’ll update the quarterly numbers in an early April post, but fuel margins have been weak from the refinery gate to the pump so far this year.

   April 2009 may not be a boring month - - I expect to see many more wild trading days for crude and gasoline - - but it’s difficult to make a case for a huge price advance. Here’s the thing: gasoline demand in April is almost always higher than it is in January, February and March. Population increases, Spring break, and a bit more weekend travel accounts for this mixture, and cheaper prices help.

   But global crude oil demand in April represents a bit of a trough, even in normal years. A very sloppy crude market could get downright slovenly in the next 45 days. It might be to oil, what the sequined jumpsuit was to a bloated middle age Elvis.

  Consider this little statistical nugget. The amount of crude oil sitting on U.S. soil - - in traditional storage and in the subterranean caverns of the Strategic Petroleum Reserve - - currently stands at 1.066-billion bbl, or some 55-million bbl more than last year. What’s more, there is about 128-million bbl more crude when compared to late March 2004.

I cite 2004 because, so far, 2009 demand has been very similar to that year. Also, Sean Penn won the Oscar in 2004 (for Mystic River) and he won this year for Milk.

   Retail gasoline prices are already up about 45cts gal since their December 30, 2008 low, and I wouldn’t be surprised to see national numbers average $1.99 gal before they average $2.19 gal. It’s another month of cross winds.

  Longer Term Prediction: I think that the average American motorist will probably save anywhere from $75-$100 each month when July and August 2009 finally roll around. July gas prices averaged $4.062 gal in 2008 and August numbers were $3.766 gal. If you calculate that an average motorist uses 50 gallons per month, you can do the math and come up with a price forecast in the $2.00-$2.25 gal range.

   But will the aura of cheap gas prices lighten the public’s mood? I doubt it, and we’ll get another malaise-worthy piece of data tomorrow when the Case Shiller Index measures the drop in home values. Another monthly survey probably means another $10k or more in value destruction for American homeowners.

  Some other observations:

-         A McKinsey study released last week noted that an oil price shock could resurface, Freddy-Krueger-like, in 2010, or 2011, or 2012, or 2013.  I agree. However, what really grabbed me was the listing of more than 62 co-authors of the study. That beckons overkill, or groupthink.  McKinsey was recently hired by Sun to look at its corporate structure, and Sun brass ultimately acknowledged that it would look to cut 20% of staff.

-         Perhaps you think that oil companies have recaptured the flag of ignominy that they ceded to financial companies when fuel prices crashed. If you think so, you are quite likely wrong. Oil Express revealed last week that Visa and MasterCard rate increases would translate into just under 2cts per fuel transaction, which translates into $600-million in new revenue for the two card networks. ExxonMobil, Shell, Chevron et al may be regarded by the public as soldiers of Satan, but card processors quite possibly occupy the management positions in Hell.

-         Many of my oil friends have asked me when I am going to become a member of Twitter and tweet, or even join the group known as “Tweeple” (I am not making this up). Since I am in my mid-50’s, I suppose I might be known as a “Tweezer” and wonder if this phenomenon may ultimately make poetry unfashionable and lead to a Tweeter Laureate.  I hope not since I am a huge fan of the limerick.