According to the EIA's latest "Short-Term Energy Outlook," a combination of low oil inventories and increasing demand is likely to keep crude oil prices near current levels through 2005. The EIA currently projects oil prices to average $37 per barrel in the third quarter of this year, about $1 per barrel higher than last month's projection. Summer gasoline prices are expected to average $1.89 per gallon, 2 cents lower than last month's projection, but the EIA expects gasoline prices to stay at $1.83 per gallon through 2005.

The EIA notes that price spikes are still quite possible given the uncertainties surrounding Middle East instability, terrorism, Iraq, and the fact that, while some optimism for improvement is warranted, oil inventories worldwide are still low.

Publication date: 07/19/2004