The Department of Energy has increased its projections for 2009 and 2010 annual average diesel fuel retail prices by 1 cent and 4 cents, respectively, from last month's predictions
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Last month, the department forecast annual diesel prices to hover around $2.46 a gallon for 2009 and $2.84 a gallon for 2010. In its report this week, the agency upped its projections to $2.47 for this year and $2.88 a gallon next year.

In its monthly Short-Term Energy Outlook, the DOE's Energy Information Administration also expects diesel prices to rise over the next few months and average $2.74 during the fourth quarter of this year, due to the upcoming winter heating fuel season. Diesel prices averaged $2.63 per gallon in August, according to the report.

Spot prices for crude oil are still volatile, although not as much as earlier this year and last year, EIA says. Its projections for West Texas Intermediate crude oil for the fourth quarter of 2009 did not change from last month's $70 per barrel, an increase of about $27 over the average for the first quarter of the year.

Meanwhile, gasoline prices are expected average $2.34 per gallon in 2009, the same as last month's projection, and $2.70 in 2010, a 4-cent boost from last month's report. The EIA attributes the rise in gasoline prices in 2010 to higher crude oil prices anticipated for next year. The EIA reports that gasoline retail prices will fall from $2.62 per gallon in August and September to an average of $2.56 per gallon over the fourth quarter of 2009.

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