EIA: Costly Crude Oil to Buoy Gasoline Prices Through 2007
May 10, 2006
Retail prices for regular gasoline will average $2.57 per gallon through 2007, according to the latest report from DOE's Energy Information Administration (EIA). The EIA's "Short-Term Energy Outlook," released on May 9th, has also upped the EIA's projection for this summer's gasoline prices by nine cents, to an average price of $2.71 per gallon for regular gasoline. The EIA expects fuel prices to be lower by September, although any news of tropical storms or hurricanes that threaten Gulf Coast energy production "could add to volatility in near-term prices in the latter part of the summer." According to the American Automobile Association's "Fuel Gage Report," the average U.S. price for regular gasoline is currently at $2.90 per gallon.
The EIA blames the high gasoline prices on the elevated prices for crude oil, which is expected to average $68 per barrel through 2007. According to EIA, growing world demand for petroleum has reduced the world's surplus oil production capacity to about 1 million barrels per day, compared to 1.8 million barrels per day at the end of 2003. "Both the inability of world oil producers to increase production capacity to meet growing demand and growing concern about the security of supplies have contributed to rising crude oil prices," concludes the EIA. And unfortunately, "the prospects for significant improvement in the world petroleum supply and demand balance appear to be fading." See the EIA report, and for a closer look at high oil prices, see also the May 3rd edition of "This Week in Petroleum," another EIA publication.