Dropping Energy Prices Offer Good News for U.S. Consumers
November 19, 2008
It's hard to find a silver lining in today's economic crisis, but the downturn has at least one positive aspect: energy prices will definitely be lower than expected this winter. DOE's Energy Information Administration (EIA) noted on November 12 that crude oil prices have tumbled from more than $133 per barrel in July to about $77 per barrel in October, dragging down other energy prices as well. Regular-grade gasoline and diesel fuel prices were at $2.22 and $2.94 per gallon, respectively, on November 10, as both have fallen by more than $1.80 per gallon from their mid-July highs. As a result, the EIA's "Short-Term Energy Outlook" expects the average U.S. heating fuel costs for those using heating oil to be 13.3% lower this winter. Heating costs will also be 8.1% lower for households using propane, only 3.6% higher for those using natural gas, and 9.5% higher for those using electricity for heat.
The drop in U.S. energy demand caused by high oil prices earlier this year and a slumping economy in the fourth quarter is projected to cause a 5.4% drop in demand for petroleum products in 2008, or about 1.1 million barrels per day below the 2007 average. The decline is expected to continue in 2009, with petroleum demand dropping another 1.3%. Global oil demand will probably end up rising by only 100,000 barrels per day in 2008 and is expected to remain essentially level in 2009, with growth in developing countries offset by declines in industrialized countries. Looking again for that silver lining, the drop in petroleum demand will help reduce greenhouse gas emissions in the United States and other industrialized countries, and it will help to reduce our dependence on oil imports. See the EIA's "Short-Term Energy Outlook."