In its monthly Short-Term Energy Outlook, the U.S. Energy Information Administration projects crude oil to average $101.45 per barrel for 2008 and $63.50 in 2009. The annual average price of a gallon of diesel in 2009 is expected to be $2.73.
The agency reports that the current U.S. and global economic downturn has led to a decrease in global energy demand, and a "rapid and substantial" reduction in crude oil and other energy prices. The condition of the global economy is expected to remain the most important factor driving world oil prices.
Another entity, the International Energy Agency, looks beyond 2009 in its annual World Energy Outlook 2008, also released Wednesday.
"We cannot let the financial and economic crisis delay the policy action that is urgently needed to ensure secure energy supplies and to curtail rising emissions of greenhouse gases," said Nobuo Tanaka, executive director of the IEA.
The WEO-2008 Reference Scenario, which assumes no new government policies, predicts world primary energy demand will grow by 1.6 percent per year on average between 2006 and 2030 - an increase of 45 percent. This is slower than projected last year, mainly due to the impact of the economic slowdown, prospects for higher energy prices and some new policy initiatives.
The IEA predicts that demand for oil will rise from 85 million barrels per day now to 106 million in 2030 - 10 million barrels per day less than projected last year. The agency says this and other trends call for energy-supply investment of $26.3 trillion to 2030, or over $1 trillion/year. Yet the credit squeeze could delay spending, potentially setting up a supply-crunch that could choke economic recovery.
"Current trends in energy supply and consumption are patently unsustainable - environmentally, economically and socially - they can and must be altered," said Tanaka. "Rising imports of oil and gas into OECD regions and developing Asia, together with the growing concentration of production in a small number of countries, would increase our susceptibility to supply disruptions and sharp price hikes. At the same time, greenhouse-gas emissions would be driven up inexorably."
WEO-2008 predicts that oil will remain the world's main source of energy for many years to come, even under the most optimistic of assumptions about the development of alternative technology. But the sources of oil, the cost of producing it and the prices that consumers will have to pay for it are extremely uncertain. "One thing is certain," Tanaka said: "While market imbalances will feed volatility, the era of cheap oil is over."