New reports from AAA and the U.S. Energy Information Administration (EIA) say that although fuel prices have been on the rise recently, they should start falling as oil prices fall and temporary production concerns are resolved. Looking ahead, EIA the predicts in its Short Term Energy Outlook that the national annual average retail price for a gallon of regular gasoline will fall from $3.63 per gallon in 2012 to $3.55 per gallon in 2013 and eventually to $3.39 per gallon in 2014.
Current retail gasoline prices, however, have been higher than they were a year ago. According to AAA’s recent Fuel Gauge Report, the national average price for a gallon of regular unleaded gasoline was $3.59 on Tuesday, Feb. 12. This price is six cents higher than it was the week before, up 28 cents from the same day in January, and up eight cents from the average price a year ago.
These higher prices are largely due to regional refinery issues and the approaching switch to summer blend gasoline. Barring geopolitical tensions, as in Libya in 2011 and with Iran in 2012, AAA expects that the rate of increases to the national average gasoline price will slow and that this price will peak during the spring at a lower price than they did during the last two years, at $3.98 per gallon in 2011 and $3.94 in 2012. For diesel, EIA predicts the average retail price for a gallon of diesel will fall to $3.92 per gallon in 2013 and to $3.82 per gallon in 2014.
Although weather-related issues have contributed to regional price differences in the last few months (for example due to Super Storm Sandy at the end of 2012), the recent winter storm Nemo had a minimal effect on fuel prices (despite long lines), according to AAA, and likely resulted in reduced demand rather than less supply.
Gasoline prices are still high on a regional basis, though, despite predictions of lower prices down the road. California and the Mountain states saw the largest price increases last week. The average gasoline price in Nevada went up 18 cents since last week; in Colorado it was 15 cents higher; in Arizona 14 cents higher; and in Utah it was up 12 cents. Drivers in Hawaii face the highest price, at $4.24 per gallon, according to AAA.
Regarding oil prices, the U.S. EIA expects the price of Brent crude oil to average $109 per barrel in 2013 and $101 per barrel in 2014. In 2012, Brent Crude averaged $112 per barrel and reached $119 per barrel in February 2013.
In addition to lower oil prices, EIA estimates total U.S. crude oil production will increase to an average of 7.3 million barrels per day (bbl/d) in 2013, up 0.9 million bbl/ed over 2012 (the average was 6.4 million bbl/d), and further increase to 7.8 million bbl/d in 2014. In general, the EIA predicts flat gasoline consumption levels during the next two years.