Energy Prices Dip and Recover in EIA's Short-Term Outlook

February 7, 2007

Warm weather in much of the United States in early January caused energy prices to continue sliding downward, according to DOE's Energy Information Administration (EIA). The EIA's Short-Term Energy Outlook, released on February 6th, notes that between mid-December 2006 and January 18th, the spot price of crude oil fell by $12 per barrel, to $50.51 per barrel. Likewise, the spot price for natural gas fell from $8.67 per thousand cubic feet (mcf) on December 1, 2006, to $5.56 per mcf on January 2nd. However, a cooling trend in late January boosted prices, and the EIA expects crude oil to average $56 per barrel in February while natural gas averages $7.35 per mcf. With crude oil trading remaining weak, the EIA has lowered its price projections for 2007 to $59.50 per barrel, rising to $62.50 per barrel in 2008 (the previous Outlook projected prices near $64 per barrel for both years). Projected natural gas prices remain nearly the same as the previous projection, at $7.10 per mcf in 2007 and $7.60 per mcf in 2008. See the EIA's Short-Term Energy Outlook.

The low crude oil prices are helping drivers save money at the pump. The "Daily Fuel Gauge Report" from the American Automobile Association noted that regular unleaded gasoline averaged $2.181 per gallon yesterday, down 7 percent from a year ago. However, the EIA projects a price increase to about $2.40 per gallon once demand increases with warmer weather. See the latest Daily Fuel Gauge Report and the EIA projections for gasoline prices.