WASHINGTON, D.C. — The U.S. Energy Information Administration (EIA) forecasts an increase in demand for petroleum products during the 2021 summer driving season as the effects of COVID-19 diminish in the United States.
EIA’s annual Summer Fuels Outlook, released with EIA’s Short-Term Energy Outlook (STEO), expects a 15% increase in U.S. highway travel this summer but still less highway travel than in the summer of 2019.
EIA also forecasts the Brent crude oil price will average $64 per barrel this summer, a 78% increase from last summer’s average of $36 per barrel. That price increase paired with an increase in gasoline and diesel demand will likely increase the cost of regular gasoline and diesel fuel this summer. EIA expects the retail price of regular-grade gasoline in the United States will average $2.78 per gallon this summer, compared with last summer’s average of $2.07 per gallon. For diesel fuel, EIA expects retail prices to average $2.91 per gallon this summer, up from an average of $2.43 per gallon last summer.
“The increase in fuel consumption we are forecasting for the summer driving season is a reflection of optimism about the U.S. economy as COVID-19 vaccinations and fiscal stimulus support continued recovery,” said Stephen Nalley, acting administrator for EIA. “There remains a lot of uncertainty, but rising levels of employment, disposable income and consumer spending point to an improving U.S. economy.”
Retail gasoline prices recently reached their highest levels in almost two years, hitting an average of $2.87 per gallon on March 22. Increasing U.S. refinery production along with rising crude oil supply from OPEC, its partner countries, and U.S. "tight" or shale oil producers should help bring those prices down. EIA forecasts retail gasoline prices to gradually fall to an average of $2.62 per gallon by September.
EIA’s STEO forecast relies on the macroeconomic model from IHS Markit, from which EIA assumes U.S. gross domestic product (GDP) growth will be 8.5% higher this summer than last.