EIA predicts average summer gas prices to be second-lowest since 2005
The average U.S. retail price for regular gasoline is forecast to stay around $2.38 per gallon, the second-lowest summer average gasoline price since 2005, according to the most recent Short-Term Energy Outlook from the U.S. Energy Information Administration (EIA).
The forecast is slightly higher than the 2016 summer average of $2.23 per gallon. The 2017 forecast, which was initially released at a higher predicted price in April, is largely attributed to decreases in crude oil prices, the EIA said. The EIA forecasts Brent crude oil prices to average $50 per barrel for the summer driving season, which is down from the $54 per barrel average predicted in April. The $4 per barrel decrease translates to an approximate decrease of 10 cents per gallon in gasoline prices, before factoring wholesale margins for both refiners and distributors.
Gasoline wholesale margins, which is calculated as the difference between the wholesale price of gasoline and the Brent crude oil price, are now forecasted at an average of 47 cents per gallon this summer, opposed to the 42 cents per gallon predicted in April. Domestic gasoline demand fell by 1.1 percent from January to April 2017, compared with the record-level demand reported in 2016. Demand still remains 3.1 percent above the previous five-year average.
EIA estimates that gasoline prices reached their peak early in 2017 when they rose to an average of $2.42 per gallon in April. The outlook also forecasts that gasoline prices will continue to decrease until reaching an average of $2.33 per gallon in September. Though fluctuations are expected, the EIA estimates that average crude oil prices will remain near $50 per barrel for the rest of the summer since the global oil market is expected to remain fairly balanced in the coming months.