Gasoline and diesel fuel prices have been falling slowly since July 14, and the U.S. Department of Energy’s (DOE’s) Energy Information Administration (EIA) expects that trend to continue over the next few months, but the longer-term outlook is for increased fuel prices.
The EIA’s Short-Term Energy
Outlook notes that gasoline and diesel fuel prices are following the trend in
crude oil prices, which peaked at $145 per barrel on July 3 before sliding to
less than $120 per barrel by early August. For the year as a whole, the EIA
expects crude oil prices to average $119 per barrel, but next year, crude oil
prices will reach a higher average price of $124 per barrel. Likewise,
regular-grade gasoline and diesel fuel prices will average $3.65 per gallon and
$4.18 per gallon this year, respectively, but will rise to an average of $3.82
per gallon and $4.27 per gallon in 2009.
With some relief for the cost
of driving and fall approaching, it’s time to start looking at the cost of
heating homes this winter. The good news is that a massive increase in domestic
natural gas production has stopped the march toward higher prices, with the spot
price in July averaging $11.45 per thousand cubic feet (Mcf) of natural gas,
down $1.62 per Mcf from June’s average price. The EIA now projects average spot
prices of $10 per Mcf in 2008 and $9 per Mcf in 2009.
But this still translates
to average residential natural gas prices of $15.58 per Mcf this winter, a 22
percent increase over last winter’s average price. The news is even worse for
those using fuel oil for heating, with a projected average price of $4.34 per
gallon, a 31 percent increase over last year’s average price. Electricity prices
are also on the increase, with a projected 5 percent increase in 2008 and a 10
percent increase in 2009.
Expect Only Short-Term Relief in Fuel Prices, Says EIA
August 22, 2008