The Department of Energy's monthly fuel price projections continue to rise in lockstep with the price of crude oil and diesel fuel. The monthly projection for February, up 3 cents from the January forecast, sees diesel fuel averaging $3.43 for 2011 and $3.51 for 2012.


On-highway diesel fuel retail prices averaged $2.99 per gallon in 2010.

In its monthly short-term energy outlook, released Tuesday, the DOE's Energy Information Administration says rising crude oil prices are the primary reason for higher retail prices, adding, "Higher gasoline and distillate refining margins are also expected to contribute to higher retail prices."

The EIA expects the price of WTI crude oil to average about $93 per barrel in 2011, $14 higher than the average price last year. For 2012, EIA projects that crude prices will continue to rise, averaging $98 per barrel.

"WTI crude oil spot prices averaged $89 per barrel in January, about the same as the December average, while over the same time period the estimated average cost of all crude oil to U.S. refineries increased by about $1 per barrel," the report noted.

EIA expects regular-grade gasoline retail prices to average $3.15 per gallon in 2011, 37 cents per gallon higher than the 2010 average, and $3.30 per gallon in 2012, with prices forecast to average about 5 cents per gallon higher in each year during the April through September peak driving season.

DOE says west coast prices will hover about 25 cents per gallon above the national average during the peak driving season. The report also notes there is a 35-percent probability that monthly average gas prices could exceed $3.50 per gallon during summer 2011, and about a 10 percent probability that it could exceed $4.00 per gallon.

To see details of this forecast update, see: www.eia.doe.gov