EIA: Gasoline Prices to Remain High All Summer
April 13, 2005
Regular gasoline prices are projected to average $2.28 per gallon through September, according to DOE's Energy Information Administration (EIA). The EIA's latest "Short Term Energy Outlook," issued on April 7th, expects the highest average cost to occur in May, when regular unleaded gasoline is projected to average $2.35 per gallon. A combination of high crude oil prices and refinery constraints is expected to keep gasoline prices high. The report also expects crude oil prices to remain above $50 per barrel through 2006, averaging about $55 per barrel. Natural gas prices were also elevated in March, exceeding $7 per thousand cubic feet, a 26 percent gain over one year ago. Natural gas prices are projected to remain near this level through 2006. See the EIA press release or go directly to the full report.
The high energy prices earned the attention last week of Federal Reserve Chairman Alan Greenspan, who noted that continued high prices will spur greater energy efficiency. According to Greenspan, "Of critical importance will be the extent to which the more than 200 million light vehicles on U.S. highways, which consume 11 percent of total world oil production, become more fuel efficient as vehicle buyers choose the lower fuel costs of lighter or hybrid vehicles." See Chairman Greenspan's speech.
According to a recent poll released by Kelly Blue Book, gasoline prices of more than $3 a gallon would significantly shift buyers away from large vehicles and toward more fuel-efficient cars. Meanwhile, although next-month futures for crude oil have dropped somewhat recently, the longer-term oil futures remain at record prices, and retail gasoline prices remain near record nominal prices. See the Kelley Blue Book press release, and for the latest oil and gasoline prices, see the New York Mercantile Exchange Web site and the American Automobile Association's "Fuel Gage Report."