WASHINGTON -- Thanks to a bullish oil-price forecast and potentially record-breaking year in gasoline consumption, the Energy Information Administration (EIA) is bumping up its projections for retail fuel prices in the latest Short-Term Energy Outlook (STEO).
Here's what the administration said we can expect for the rest of this year and into 2017 ...
With a 2.5% increase in highway travel, the EIA expects 2016 to break a previous 2007 record for highest annual average for gasoline consumption, up 1.8% from 2015 to hit 9.33 million barrels per day (bpd). The agency forecasts 2017 consumption to stick around that level.
EIA forecasts a $2.27-per-gallon retail average for regular-grade gasoline in the 2016 summer driving season (April through September). This projected summer average is 6 cents per gallon (CPG) higher than EIA forecasted in May’s STEO, but still 36 CPG lower than the summer 2015 average. The agency expects June to see the yearly peak at an average of $2.36 per gallon, with lower prices for the second half of 2016.
The regular gasoline retail forecast for 2016 is now at $2.13 per gallon, 5 CPG higher than EIA projected in May’s STEO. The agency forecasts a $2.27-per-gallon average for 2017, up 3 CPG from last month’s projection.
EIA bumped its forecast for diesel’s 2016 retail average from the May STEO by 7 CPG to $2.34 per gallon. For 2017, it raised the forecast 5 CPG to an average of $2.69 per gallon, thanks again to higher oil-price forecasts.
Wholesale gasoline margins in 2015 swelled greatly above the five-year average because of high demand in the United States and overseas. Growing demand for higher-octane gasoline raised prices for high-octane blending components, which also helped widen wholesale margins. These same conditions are sticking around for 2016. EIA projects higher gasoline production and refinery run rates in summer 2016 vs. 2015, which should moderate wholesale margins somewhat, but still keep them above the five-year average.
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