Energy Department Forecast Calls for Stable to Falling Fuel Prices
April 09, 2013
If a new U.S. Energy Department forecast holds true, diesel and gasoline prices during April through September should be the same as they were a year ago and will move lower into next year.
In its Short Term Energy and Summer Fuels Outlook, the Energy Information Administration predicts diesel fuel prices, which averaged $3.95 per gallon last summer, are projected to fall slightly to an average of $3.94 per gallon this summer.
For the entire year, the EIA is forecasting diesel will average $3.90 per gallon, the same as it predicted last month, while next year it’s expected to average $3.80 per gallon
Regular-grade gasoline retail prices, which averaged $3.69 per gallon last summer, will average $3.63 per gallon during the current summer driving season it is predicted. The projected monthly average regular retail gasoline price falls from $3.69 per gallon in May to $3.57 per gallon in September. For all of 2013 it’s expected average price is $3.55 per gallon, before falling to $3.38 in 2014.
The report says the price projections through the summer reflect falling prices for the cost of crude oil, best represented by the Brent crude oil price, which averages about $108 per barrel this summer compared with the $109-per-barrel average of last summer.
Projected consumption of distillate fuel, which includes diesel fuel and heating oil, should average 3.7 million barrels per day this summer, up 20,000 or 0.6% from last summer, driven by increasing manufacturing output and foreign trade.
This news about distillate fuels prices, especially diesel, is a bit surprising considering distillate inventories are projected to start the summer at 112.4 million barrels, down substantially from the 133.8 million barrels recorded at the start of last summer and the previous five-year average of 136.6 million barrels.
However, EIA explains distillate inventories typically build during the summer season in preparation for the heating season. This summer, the build is forecast to average about 110,000 barrels per day compared to the anomalous 35,000 barrels per day draw recorded last summer, but similar to the previous five-year average summer build of 71,000 barrels per day.
End-of-summer stocks are 133.1 million barrels, up slightly from the 127.4 million barrels recorded at the end of last summer, but well below the five-year end-of-summer average of 149.6 million barrels.