On-highway diesel prices are expected to average $2.28 per gallon this year and $2.55 in 2010, according to the U.S. Energy Information's Short Term Energy Outlook released Tuesday.

U.S. real gross domestic product is expected to decline by 2.7 percent in 2009, triggering decreases in domestic energy consumption for all major fuels, the EIA reported. Economic recovery is projected to begin in 2010, with 2.2 percent year-over-year growth in GDP.

On-highway diesel fuel retail prices, which averaged $3.79 per gallon in 2008, are projected to average $2.28 per gallon in 2009 and $2.55 in 2010. This is about the same as last month's forecast of $2.27 and $2.54. Regular-grade gasoline prices are projected to average $1.95 per gallon in 2009 and $2.19 per gallon in 2010.

The EIA predicts West Texas Intermediate crude oil prices to average $43 per barrel in 2009 and $55 per barrel in 2010, much lower than 2008's $100 average.

The worsening global economy and a weak oil consumption outlook are keeping the world oil market well supplied, despite two downward revisions in production targets by the Organization of the Petroleum Exporting Countries (OPEC) within the past few months, EIA says. Lower global oil demand and rising surplus production capacity through at least mid-year 2009 reduce the likelihood of a major rebound in oil prices.

World oil consumption is projected to fall by 1.2 million barrels per day this year. World oil consumption is expected to rebound in 2010, growing by more than 1.2 million barrels per day, due to an expected recovery in the global economy.

Total U.S. petroleum products consumption in 2008 fell by almost 1.2 million barrels per day, or 5.8 percent, from the 2007 average, the largest annual decline since 1980. That number is expected to fall by a further 460,000 barrels per day, or 2.4 percent, this year.

At the same time, domestic crude oil production is expected to rise. In 2008, domestic crude oil production averaged 4.95 million barrels per day, down by 110,000 from 2007. However, in 2009, domestic output is projected to increase by about 400,000 barrels per day to an average of 5.35 million. This would be the first increase in production since 1991. Output is projected to rise by a further 130,000 barrels per day in 2010. Contributing to the increases in output are the Gulf of Mexico Thunder Horse platform, which is coming on stream now, and the Tahiti platform, expected to come on stream later this year.