DOE Lowers Oil, Diesel Predictions, Still Expects Higher 2011 Prices
As oil prices have fallen on the futures market recently, the Department of Energy has revised its oil price outlook for the year downward -- but says we still are looking at higher petroleum product prices for the year overall compared to 2010
As oil prices have fallen on the futures market recently, the Department of Energy has revised its oil price outlook for the year downward -- but says we still are looking at higher petroleum product prices for the year overall compared to 2010.
West Texas Intermediate crude oil spot prices averaged $89 per barrel inFebruary, $103 per barrel in March, and $110 per barrel in April. During the first week of May WTI crude oil prices fell by nearly $17 per barrel to $97 per barrel, along with a broad set of commodities, and then rebounded by almost $6 per barrel Monday.
However, the DOE's Energy Information Administration, in its Short-Term Energy Outlook released Tuesday, still expects oil markets to tighten through 2012 given projected world oil demand growth and slowing growth in supply from countries that are not members of OPEC. Projected WTI spot prices average $103 per barrel in 2011 and $107 per barrel in 2012, reductions of about $4 and $6 per barrel respectively from last month's Outlook.
EIA expects that on-highway diesel fuel retail prices, which averaged $2.99 per gallon in 2010, will average $3.89 per gallon in 2011 and $3.93 per gallon in 2012, reductions of 9 cents and 14 cents per gallon respectively from last month's Outlook.
EIA forecasts that the annual average regular-grade retail gasoline price will increase from $2.78 per gallon in 2010 to $3.63 per gallon 2011 and to $3.66 per gallon in 2012, reductions of 7 cents and 14 cents per gallon respectively from last month's Outlook.
The sizable jump in retail prices this year reflects not only the higher average cost of crude oil but also an increase in U.S. refinery gasoline margins (the difference between refinery wholesale gasoline prices and the average cost of crude oil) from an average of $0.34 per gallon in 2010 to $0.50 per gallon in 2011, near the $0.53 per gallon and $0.56 per gallon highs set in 2006 and 2007, respectively. The projected refinery gasoline margin falls back to $0.44 per gallon in 2012.
World crude oil and liquid fuels consumption grew to 86.7 million bbl/d in 2010, surpassing the previous record of 86.3 million bbl/d set in 2007. EIA expects that world liquid fuels consumption will grow by 1.4 million bbl/d in 2011, followed by 1.6 million bbl/d growth in 2012, resulting in total world consumption of 89.7 million bbl/d in 2012.
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