In its monthly Short-Term Energy Outlook, the U.S. Energy Information Agency predicted this week that diesel fuel prices, which averaged $4.37 per gallon last summer, will average $2.27 this summer.
The DOE agency predicts diesel prices will average $2.30 in 2009 and and $2.69 next year.
Regular-grade gasoline retail prices, which averaged $3.81 per gallon last summer, are projected to average $2.23 per gallon during the current driving season. The monthly average gasoline price is expected to peak at about $2.30 per gallon late this summer.
Movements in gasoline and diesel prices are driven primarily by the change in crude oil prices and wholesale margins. These retail price projections reflect lower crude oil prices, projected to average about $52 per barrel this summer, significantly lower than the $116 per barrel average last summer.
The price of West Texas Intermediate (WTI) crude oil averaged $100 per barrel in 2008. The global economic slowdown is projected to reduce the average price to $53 per barrel this year. Assuming an economic recovery next year, WTI prices are expected to average $63 in 2010.
World oil consumption is expected to drop by 1.35 million barrels per day (bbl/d) in 2009 compared with year-earlier levels, due to the global economic recession. The bulk of the decline is expected to be concentrated in the first half of the year. World oil consumption is expected to grow by 1.1 million bbl/d in 2010, driven by a recovery of global GDP growth to 2.6 percent.
Distillate fuel consumption, which includes both diesel fuel and heating oil, is projected to be about 170,000 bbl/d, or 4.5 percent, lower than last summer's average.