WASHINGTON - Crude oil prices have dropped from record highs earlier this year to less than $50 per barrel, and the U.S. Department of Energy’s (DOE’s) Energy Information Administration (EIA) now expects crude oil prices to average only $50 per barrel in 2009. According to the EIA’s latest Short-Term Energy Outlook, the “increasing likelihood of a prolonged global economic downturn” has put downward pressure on energy prices, causing the average U.S. price for regular grade gasoline to fall to $1.70 per gallon as of Dec. 8. Diesel fuel prices are also down, at $2.52 per gallon.

In fact, all fuel prices are down, and that will be good news for U.S. consumers this winter. Residential heating oil prices are projected to average $2.53 per gallon during this heating season, down 24 percent from last year, and propane prices are expected to be 14 percent lower than last year. Natural gas spot prices are expected to be about 32 percent lower next year, but residential natural gas prices will only be about 1.3 percent lower this winter, in part because residential prices respond much more slowly than the spot market. U.S. petroleum consumption is projected to fall by 5.8 percent for 2008 as a whole, and to fall another 1 percent next year, while new oil production platforms in the Gulf of Mexico are expected to boost domestic crude oil production by 6.5 percent in 2009.

Publication date: 12/15/2008