In its August 2008 Short-Term Energy Outlook, the EIA says these higher prices "reflect strength in diesel demand, particularly in emerging markets, which has significantly increased the margins between diesel prices and crude oil costs from those of last year."
Two months ago, in its June outlook, the agency projected diesel prices would average $4.32 per gallon in 2008 and 2009.
The price of West Texas Intermediate crude oil, which averaged $72 per barrel in 2007, is now projected to average $119 per barrel in 2008 and $124 per barrel in 2009.
At the same time, the agency expects slow GDP growth and continued high crude oil prices to keep a damper on U.S. petroleum consumption through the end of next year. The EIA says the declines are not expected to be as large as they have been over the first half of this year. 2009 average total consumption projected to be about 120,000 barrels per day (0.6 percent) lower than the 2008 average.
Real GDP year-over-year growth is projected to slow to 1.3 percent, 0.8 percent, and 0.5 percent over the next three quarters, respectively, before starting to recover in the second half of next year.
Finally, temperatures in the Northeast during 2009 are projected to be slightly colder than 2008, with heating degree-days about 3 percent higher, not enough to significantly affect the nation's petroleum consumption.