EIA: Record Oil Prices to Cause a Gasoline Price Spike
March 12, 2008
Crude oil prices are at record highs and are being felt at the pump, with the national average price of regular gasoline expected to peak at $3.50 per gallon this spring, according to a new report from DOE's Energy Information Administration (EIA). The EIA's "Short-Term Energy Outlook," released on March 11, notes that the spot price of crude oil closed at nearly $108 per barrel on March 10 and is expected to average $102 per barrel for the month of March, up from an average of $95 per barrel in February. As a result, some areas of the country may experience short-term peaks in regular gasoline prices exceeding $4 per gallon, while the price of gasoline for the year as a whole is expected to average $3.21 per gallon. Diesel fuel prices will be even higher, averaging $3.70 per gallon for March and April and $3.45 per gallon for the full year. And according to the American Automobile Association's Daily Fuel Gauge Report, motor fuels have already hit record prices, with regular gasoline averaging $3.23 per gallon and diesel fuel averaging $3.85 per gallon as of yesterday. See the EIA's "Short-Term Energy Outlook," the Daily Fuel Gauge Report, and the latest crude oil spot prices on the New York Mercantile Exchange Web site.
The EIA expects the higher prices to have a direct impact on petroleum consumption in the United States. The total U.S. consumption of liquid fuels and petroleum products averaged 20.7 million barrels per day in 2007, but is projected to increase by only 40,000 barrels per day in 2008. With the rapid increase in ethanol production to meet the new national Renewable Fuel Standard, the growth in liquid fuel consumption will be exceeded by the growth in ethanol production, causing U.S. petroleum consumption to drop by 90,000 barrels per day. For the world as a whole, however, petroleum consumption is projected to increase by 1.3 million barrels per day by the end of 2008. The EIA expects industrialized countries to increase their demand by only 200,000 barrels per day this year, while the bulk of the demand growth will occur in China, India, the Middle East oil-producing countries, and other Asian countries.