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Energy Department Forecasting Lower Fuel and Crude Prices Into 2014

May 7, 2013

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EIA projects the Brent crude oil spot price will fall from an average of $112 per barrel in 2012 to annual averages of $106 per barrel and $101 per barrel in 2013 and 2014, respectively. (Photo courtesy BP.)
EIA projects the Brent crude oil spot price will fall from an average of $112 per barrel in 2012 to annual averages of $106 per barrel and $101 per barrel in 2013 and 2014, respectively. (Photo courtesy BP.)

A new forecast from the federal government is calling for fuel prices to keep up their trend of moving generally lower, due to expected stability of crude oil prices.

The new Short-Term Energy Outlook from the U.S. Energy Department’s Energy Information Administration says diesel fuel prices, which averaged $3.95 per gallon last summer, are projected to fall to an average of $3.88 per gallon this summer. Regular‐grade gasoline retail prices, which averaged $3.69 per gallon last summer, will average $3.53 per gallon during the current summer (April through September) driving season.

The annual average cost for on-highway diesel is projected to drop from $3.97 last year to $3.92 this year and to $3.79 in 2014.

The annual average regular gasoline retail price is projected to decline from $3.63 per gallon in 2012 to $3.50 per gallon in 2013 and to $3.39 per gallon in 2014.

Through much of this year the price of fuel has been falling following a string of hikes early on. This week diesel fell for the 10th consecutive week while gasoline turned slightly higher for the first time in ten weeks.

Part of this reason for the anticipated lower prices is EIA believes world oil production will exceed consumption, resulting in a buildup for world oil stocks, though some short-lived price increases are expected, as world oil demand hits its summer peak. This is expected in the third quarter of the year, with it loosening in the final quarter.

After averaging $94 per barrel in 2012, West Texas Intermediate crude oil spot price is forecast to average $93 per barrel in 2013 and $92 per barrel in 2014.

“By 2014, several pipeline projects from the Midcontinent to the Gulf Coast refining centers are expected to come on line, reducing the cost of transporting crude oil to refiners, which is reflected in a narrowing in the price discount of WTI to Brent crude," EIA says.

EIA projects the Brent crude oil spot price will fall from an average of $112 per barrel in 2012 to annual averages of $106 per barrel and $101 per barrel in 2013 and 2014, respectively, reflecting the increasing supply of liquid fuels from non‐OPEC countries.

You can read the entire report on the DOE’s website.

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