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Crude Oil and Gasoline Prices: A Timeline

May 2001 - Tight gasoline supplies in the U.S.

Crude oil prices had risen dramatically in 1999-2000. Higher than normal demand for heating oil and winter gasoline had depleted already low inventories and prevented the traditional build-up of gasoline stocks in anticipation of the summer driving season. Extensive refinery maintenance heading into the driving season meant less crude oil could be refined into fuel products.  With each successive weekly report that inventory levels were down from the previous year, speculators drove up wholesale gasoline prices across North America.

When the amount of available gasoline returned to adequate levels, prices first fell but then increased again in August during a late summer surge in demand. Crude oil prices remained relatively stable throughout this period.

September 2001 - Terrorist attacks in the U.S.

Following the events of September 11th, demand for fuel products plummeted as airline travel dropped off significantly and many Americans cancelled road trips. Both crude oil and gasoline prices reflected this dramatic drop in demand.

March 2003 - Iraq invasion

In the weeks leading up to the U.S. invasion of Iraq, new fears of oil supply disruptions   sparked steady increases in the price of crude oil and gasoline.  After the invasion, when it became clear that the market could deal with the supply disruptions, prices of both crude oil and gasoline dropped back to pre-war levels.

August 2003 - Eastern Seaboard blackout

The massive power blackout across much of the Northeastern Seaboard cut off power to a number of refineries in Ontario and New England.  Because of the sudden shut down, some refineries took several weeks to restore operations to full production again.  The disruption to the supply of gasoline drove prices up for a few days.  Crude oil prices were not affected.

May 2004 - Tight gasoline supplies in the U.S.

The strong recovery of the U.S. economy created higher than expected demand for fuel products and prevented refineries from building gasoline stocks in advance of the peak driving season.  Gasoline inventories in the U.S. were down 2% from the previous year and were significantly lower than the five-year average. With less gasoline available, there was limited flexibility by the industry to respond to changes in supply or demand. Market speculators reacted to this situation by bidding up the price of gasoline.

August 2005 - Hurricane Katrina

Hurricane Katrina caused significant damage to offshore rigs, refineries, pipelines and ports in the Gulf of Mexico. Adding to the physical devastation were wide-scale electricity outages, flooding, and evacuations of oil industry employees. The immediate loss of more than 25% of U.S. refining capacity created severe shortages of gasoline and other fuel products across North America.  The price impacts were felt worldwide as markets struggled to re-balance and European markets tried to free up product for export to the U.S.

Although Hurricane Rita did not cause any further supply interruptions, speculation that it would led to significant price spikes in the days leading up to its arrival on land.  When the damage was assessed, prices dropped quickly to their post-Katrina levels.

Within a few weeks, supply and demand were more balanced and prices subsided somewhat.  However, nearly a year later the U.S. still has not returned to full refining capacity.  Gasoline markets in North America have remained very tight and prices have continued to be volatile.

April 2006 - Tight gasoline supplies in Canada and the U.S.

Heading into the summer driving season, Canadian gasoline and diesel fuel prices are already well ahead of last year’s levels.  Persistently high crude oil prices, new fuel specifications, the tight North American supply situation and increased demand are all contributing to higher more volatile prices this season.