The Energy Information Administration has released its July Short-Term Energy Outlook. (The next update will be released in early August.) Here are the highlights, quoted from their website (emphasis mine):
- The spot price of West Texas Intermediate (WTI) crude oil increased from $122 per barrel on June 4 to $145 per barrel on July 3. Global supply uncertainties, combined with significant demand growth in China, the Middle East, and Latin America are expected to continue to pressure oil markets. WTI prices, which averaged $72 per barrel in 2007, are projected to average $127 per barrel in 2008 and $133 per barrel in 2009.
- Regular-grade gasoline is expected to average $3.84 per gallon in 2008, more than $1 per gallon above the 2007 average price. The U.S. average regular-grade gasoline price, about $4.10 per gallon on June 30, is projected to remain over $4 per gallon until the fourth quarter of 2009. Retail diesel fuel prices, which averaged $2.88 in 2007, are projected to average $4.35 per gallon in 2008 and $4.48 per gallon in 2009.
- World oil consumption of liquid fuels and other petroleum is projected to grow by almost 900,000 barrels per day (bbl/d) in 2008 and by an additional 1.4 million bbl/d in 2009, while U.S. consumption is expected to decline by about 400,000 bbl/d in 2008. Adjusting for increased ethanol use, U.S. petroleum consumption is projected to fall by 530,000 bbl/d in 2008.
- The Henry Hub natural gas spot price averaged $7.17 per thousand cubic feet (Mcf) in 2007 and is expected to average $11.86 per Mcf in 2008 and $11.62 per Mcf in 2009.
- Rapidly increasing delivered fuel costs for power generation, particularly for natural gas, are pushing up electricity prices. Residential electricity prices are projected to increase by an annual average of about 5.2 percent in 2008 and 9.8 percent in 2009 compared with an increase of 2.2 percent in 2007.
On U. S. consumption, the report reads:
Total petroleum consumption is projected to shrink by 400,000 bbl/d in 2008, a sharper drop than the nearly 300,000 bbl/d projected in the previous Outlook, based on prospects for a weak economy and record high crude oil and product prices extending into 2009 (U.S. Petroleum Products Consumption Growth). In 2009, total consumption is projected to remain almost flat at the 2008 level.
On gasoline prices:
Regular-grade motor gasoline retail prices, which averaged $2.81 per gallon in 2007, are projected to rise to an average of $3.84 per gallon this year and $4.06 per gallon in 2009. These prices hit a record of $4.10 per gallon on June 30. For the remainder of 2008, pump prices are projected to remain well above $4.00 per gallon. This forecast reflects very weak gasoline margins because of the decline in gasoline consumption and growth in ethanol supply.
Diesel fuel retail prices in 2008 are projected to average $4.35 per gallon, up from $2.88 per gallon last year, and increase to an average of $4.48 per gallon in 2009. These higher prices reflect strength in diesel demand, particularly in emerging markets, which has significantly increased the margins between diesel prices and crude oil costs from those of last year. Over the next few months, these prices are projected to remain near the June 30 price of $4.65 per gallon as refiner margins begin to weaken slightly, offsetting the projected rise in crude oil costs.
