EIA: Economic Crisis to Keep Energy Prices Low Through 2009

December 10, 2008

U.S. crude oil prices have dropped from record highs earlier this year to less than $50 per barrel, and DOE's Energy Information Administration (EIA) now expects crude oil prices to average only $50 per barrel in 2009. According to the EIA's "Short-Term Energy Outlook," released on December 9, the "increasing likelihood of a prolonged global economic downturn" has put downward pressure on energy prices, causing the average U.S. price for regular grade gasoline to fall to $1.70 per gallon on December 8. Diesel fuel prices are also down, at $2.52 per gallon.

In fact, all fuel prices are down, and that will be good news for U.S. consumers this winter. Residential heating oil prices are projected to average $2.53 per gallon during this heating season, down 24% from last year, and propane prices are expected to be 14% lower than last year. Natural gas spot prices are expected to be about 32% lower next year, but residential natural gas prices will only be about 1.3% lower this winter, in part because residential prices respond much more slowly than the spot market. U.S. petroleum consumption is projected to fall by 5.8% for 2008 as a whole, and to fall another 1% next year, while new oil production platforms in the Gulf of Mexico are expected to boost domestic crude oil production by 6.5% in 2009. See the EIA's "Short-Term Energy Outlook."