EIA Forecasts Lower Gas Prices This Summer

The U.S. Energy Information Administration reports that regular gasoline will average $3.63 a gallon this summer, a six-cent drop from the summer of 2012.

April 15, 2013

HOUSTON – Motorists could see a drop in gas prices this summer, according to government data.

The U.S. Energy Information Administration (EIA) reports in its Short-Term Energy Outlook that during the April-through-September summer driving season this year, regular gasoline retail prices are forecast to average $3.63 per gallon. The projected monthly average regular retail gasoline price falls from $3.69 per gallon in May to $3.57 per gallon in September. EIA expects regular gasoline retail prices to average $3.56 per gallon in 2013 and $3.39 per gallon in 2014, compared with $3.63 per gallon in 2012.

EIA expects West Coast gasoline prices to be as much as 26 cents per gallon higher this summer than the national average, while the Gulf Coast could be 16 cents per gallon lower than the national average.

Other major characteristics of the 2013 summer gasoline market forecast include:

  • Gasoline consumption is expected to be down 20,000 bbl/d (-0.2%), as a 0.3% rise in highway travel is more than offset by improvements in vehicle fuel efficiency.
  • Gasoline production may increase by 20,000 bbl/d (0.3%).
  • Net imports of gasoline are expected to be 1.1% lower than in 2012.

EIA expects that the Brent crude oil spot price, which averaged $112 per barrel in 2012 and rose to $119 per barrel in early February 2013, will average $108 per barrel in 2013 and $101 per barrel in 2014. The projected discount of West Texas Intermediate (WTI) crude oil to Brent, which increased to a monthly average of more than $20 per barrel in February 2013, is forecast to average $14 per barrel in 2013 and $9 per barrel in 2014, as planned new pipeline capacity lowers the cost of moving mid-continent crude oil to the Gulf Coast refining centers. 

“The expected drop this summer compared with last year is due in part to lower demand, as cars become more efficient. But it also reflects a continuing moderation in the global cost of crude, a trend driven by growth in oil production from hydraulic fracturing of shale deposits in the U.S., analysts say,” wrote the Wall Street Journal.

"Motorists are beginning to see some benefits arising from increased domestic oil production, but gas prices remain historically very high. Most motorists would say that prices have not fallen nearly as fast as necessary to reduce pain at the pump," AAA spokesman Michael Green told the news source.

AAA estimates that every $1-per-barrel change in the price of crude moves gasoline prices up or down 2.5 cents a gallon.

Advertisement
Advertisement
Advertisement