A new government forecast is calling for double-digit gains in diesel prices next year, while gasoline is expected increase by only half as much.
The Energy Department’s latest monthly Short-Term Energy Outlook calls for trucking’s main fuel to average $2.71 per gallon in 2017, a 15.1% hike from this year’s forecast average of $2.36 per gallon.
If this happens it would return diesel to the average level seen in 2015. However, that's still far less than the $3.83 per gallon average in 2014 reached before fuel prices dropped due to falling crude oil prices stemming from overproduction and decreased worldwide demand.
The average cost of regular grade gasoline is expected to increase just 7.6% in 2017 to $2.28 per gallon, following an expected average this year of $2.12 per gallon. This compares to an average of $2.43 per gallon in 2015 and $3.36 in 2014.
In the nearer term, diesel is expected to increase in the third quarter of this year to an average of $2.48 per gallon following a second quarter average of $2.30 per gallon. It is forecast to continue slowly rising each consecutive quarter through 2017, when the average is expected to hit $2.87 per gallon.
In contrast, regular grade gasoline is expected to average $2.25 per gallon in the current quarter, the same at it was in the second quarter but up from $1.90 per gallon in the first quarter of 2016. It’s then projected to average a little above $2 per gallon in the fourth quarter of 2016 and the first quarter of 2017 before peaking next year at $2.39 in the third quarter.
Likely helping to push prices higher will be that U.S. crude oil production averaged 8.6 million barrels per day in June, slightly below the previous month’s level and well below the 9.7 million barrels per day reached in April 2015. Also worldwide crude inventory increases are expected to slow this year to a daily rate that’s a little less than half the pace seen in 2015. In 2017 it's projected to be just a fraction of what it was two years earlier.