Federal officials have raised their expectations for diesel and gasoline prices this year and are predicting even larger hikes for 2017, according to a new report from the U.S. Department of Energy.
Its latest Short-Term Energy Outlook forecasts diesel will average $2.27 per gallon this year. This is an increase of 16 cents from last month’s forecast and compares to the current weekly average of $2.271 per gallon, its highest level so far this year – although it’s nearly 61 cents lower than this week a year ago.
Crude oil prices are expected to be around $6 to $10 ber barrel higher for all of this year and 2017, respectively, than the projection in last month's outlook. The department also cites overall improving economic data, growing oil supply disruptions, plus falling U.S. crude oil production and oil rig counts.
Next year, the department is projecting diesel will average $2.64 per gallon, up 31 cents from last month’s projection for 2017. That would still be less than yearly averages of $2.71 per gallon in 2015 and $2.83 per gallon in 2014.
In the near term, diesel is expected to average $2.24 per gallon in the second quarter before increasing slightly to an average of $2.33 per gallon in the third quarter of this year. This is 21.3% and 11.4% less, respectively, than the same quarters in 2015.
The expectation is diesel will average $2.41 per gallon in the final quarter of the year before increasing in each consecutive quarter of 2017, when it is forecast to average $2.81 per gallon in the final quarter of next year.
For regular grade gasoline during the April-through-September summer driving season of 2016, retail prices are forecast to average $2.21 per gallon, 17 cents higher than forecast a month ago but 42 cents lower than last summer.
U.S. regular gasoline retail prices are forecast to average $2.08 per gallon in 2016 and $2.24 per gallon in 2017, 14 cents higher and 24 cents more, respectively, than forecast in last month’s outlook.