Gasoline Prices Projected Up 48 Cents This Summer
04/07/2010 09:16AM
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Regular-grade gasoline retail prices, which averaged $2.44 per gallon last summer, are projected to average $2.92 per gallon during the current driving season. The monthly average gasoline price is expected to peak at about $2.97 per gallon in early summer. Average U.S. pump prices likely will exceed $3 per gallon at times during the forthcoming spring and summer driving season. Diesel fuel prices, which averaged $2.46 per gallon last summer, are projected to average $2.97 this summer. However, because short-term prices can be quite volatile, weekly prices will differ from the monthly average.
Because taxes and retail distribution costs are generally stable, movements in gasoline and diesel prices are driven primarily by changes in crude oil prices and wholesale margins. As noted in our discussion of crude oil markets, the current value of options contracts implies a 95 percent confidence band for future crude oil prices that is wide and widens further over time. Realized crude oil prices that differ from our forecast would be reflected in the price of motor fuels, with each dollar per barrel sustained difference in crude oil prices relative to the forecast translating into approximately a 2.4 cent-per-gallon change in prices absent consideration of factors specific to the markets for gasoline and diesel fuel.
Retail price projections reflect higher prices for the refiner acquisition cost of crude oil, expected to average about $79 per barrel this summer compared with the $62 per barrel average of last summer. EIA expects wholesale gasoline margins (the difference between the wholesale price of gasoline and the refiner acquisition cost of crude oil) to average 43 cents per gallon this summer, up 5 cents per gallon from last summer. Similarly, EIA forecasts higher wholesale diesel margins this summer (33 cents per gallon) than last summer (25 cents per gallon) because of the expected worldwide recovery in distillate markets.