During the April-through-September summer driving season this year, regular gasoline retail prices are forecast to average about $3.95 per gallon, peaking in May at a monthly average price of $4.01 per gallon, according to the U.S. Energy Information Administration’s short-term energy and summer fuels forecast.

EIA expects regular gasoline retail prices to average $3.81 per gallon in 2012 and $3.73 per gallon in 2013, compared with $3.53 per gallon in 2011. The June 2012 New York Harbor Reformulated Blendstock for Oxygenate Blending (RBOB) futures contract averaged $3.28 per gallon for the five trading days ending April 5. Based on the market value of futures and options contracts, there is a 40 percent probability that its price at expiration will exceed $3.35 per gallon, consistent with a monthly average regular-grade gasoline retail price exceeding $4 per gallon in June.

EIA has lowered the forecast 2012 average U.S. refiner acquisition cost of crude oil by $2 per barrel from last month’s outlook to $112 per barrel, still $10 per barrel higher than last year’s average price. EIA expects the price of West Texas Intermediate (WTI) crude oil to average about $106 per barrel in 2012, the same as in last month’s outlook but $11 per barrel higher than the average price last year. Constraints in transporting crude oil from the U.S. mid-continent region contribute to the expected discount for WTI relative to other world crude oil prices. EIA expects WTI prices to remain relatively flat in 2013, averaging about $106 per barrel, while the average U.S. refiner acquisition cost of crude oil averages $110 per barrel.

High oil prices mean Texas budget relief

The silver lining – if there is one – to the rising price of fuel and the crude oil from which it is refined may be relief for the Texas state budget, which has been severely squeezed in recent years.

Between high oil prices and the impact of improved drilling technology that has greatly enhanced production, a greater-than-expected windfall of tax dollars from oil and gas wells across Texas is flowing into state coffers.

Halfway through the current state fiscal year, taxes paid on natural gas production are up 73 percent over the same period last year, while revenue from the oil production tax is up 49 percent.

Together, oil and gas taxes so far have brought in a total of $1.8 billion. That amounts to $684 million more than in the first half of last year, which also showed a sharp increase with $2.6 billion in oil and gas tax revenues.

In addition, the Austin American-Statesman reported in early April that state sales tax collections have been far exceeding projections, due in part to oil and gas companies’ heavy spending on equipment, supplies and services needed to drill new wells.

“The boom is great. It’s not going to solve all of our fiscal problems, but it is one heck of a down payment,” said Dale Craymer, president of the business-backed Texas Taxpayers and Research Association.

This trend is widely expected to continue thanks to greatly increased production in West Texas oil fields and the brave new world of shale oil and gas. Industry innovations have made it economical to drill in areas previously considered unproductive; horizontal drilling meant wells could be bent to reach the deposits and hydraulic fracturing could be used to loosen up the oil and gas by injecting water, sand and chemicals into a well under high pressure.

Baker Hughes rig count dips, but still up on 2011

Baker Hughes announced this week that the international rig count for March 2012 was 1,192, down 12 from the 1,204 counted in February 2012, and up 45 from the 1,147 counted in March 2011. The international offshore rig count for March 2012 was 303, down 17 from the 320 counted in February 2012 and up 8 from the 295 counted in March 2011.

The average U.S. rig count for March 2012 was 1,979, down 11 from the 1,990 counted in February 2012 and up 259 from the 1,720 counted in March 2011.

The worldwide rig count for March 2012 was 3,663, down 237 from the 3,900 counted in February 2012 and up 229 from the 3,434 counted in March 2011.

Business Journal editor James Shannon offers a weekly column of business news for readers of The Examiner. For more details, see the editions of the Business journal published monthly in Beaumont, Port Arthur and Greater Orange. Check out the blog at or e-mail james [at] beaumontbusinessjournal [dot] com.