Upcoming fuel price projections are anticipated to be the highest since summer 2018, with the ongoing COVID-19 pandemic continuing to affect petroleum markets.
The U.S. Energy Information Administration (EIA) released its Summer Fuels Outlook report, stating markets will be less affected than they were last summer with diminishing impacts through 2021, as more people receive virus vaccinations.
“More vaccinations, combined with the U.S. fiscal stimulus, should support continuing economic recovery, which will drive petroleum demand growth,” EIA stated in its report. “We expect more U.S. consumption of gasoline and distillate fuel than last summer, but less than the summer of 2019. However, we expect the highest gasoline prices since summer 2018.”
The administration expects regular-grade gasoline prices in the U.S. to average $2.78 per gallon this July, compared with last summer’s $2.07 per gallon average. The West Coast is forecasted to see a high of $3.39 per gallon, with the Gulf Coast at a low of $2.47 per gallon this summer.
Macroeconomic forecasts are a key outlook driver, EIA stated. Higher economic growth in the forecast reflects rising employment levels, disposable income and consumer expenditures, which EIA noted typically means rising gasoline and diesel consumption. However, even with these supportive factors, EIA stated the consumption and price forecast remains uncertain.
Last summer had the lowest average summer retail price since 2004, EIA stated, because widespread COVID-19 impacts significantly reduced gasoline and oil consumption, causing a drop in crude oil prices.
EIA forecasts monthly average retail gas prices to gradually fall from a 2021 peak average of $2.86 per gallon in April to $2.62 per gallon by September. Retail gasoline prices reached the highest level in almost two years, ahead of the summer driving season.
According to EIA’s weekly Gasoline and Diesel Fuel Update, the U.S. regular-grade gasoline price March 22 was $2.87 per gallon, 75 cents per gallon higher than the same time last year, and the highest average price for any week since May 13, 2019.
“We expect that growth in refinery output and rising crude oil supply from the [Organization of the Petroleum Exporting Countries] and U.S. tight oil producers will begin to put downward pressure on retail gasoline prices over the summer, despite an expected rise in gasoline demand,” EIA stated.
Stay-at-home orders and travel restrictions had more pronounced impacts on gasoline and jet fuel demand than on diesel fuel, EIA stated. The decline in gasoline and jet fuel consumption was the result of consumers traveling less. Because diesel fuel is used extensively in trucking, increased home delivery demand and distribution of necessary goods and services likely supported diesel demand, EIA stated.
“Our forecast is subject to many of the same uncertainties as the gasoline price forecast, particularly related to crude oil prices, which are the main drivers of overall diesel fuel price levels,” EIA’s report stated.
