The EIA's latest "Short-Term Energy Outlook" reflects uncertainty in the oil and gasoline markets, noting, "It is difficult to know what will happen in the near term." Despite that uncertainty, the EIA projects an increase in oil supply that will cause crude oil prices to drop, averaging $36.20 per barrel in the third quarter of this year after averaging $40.30 per barrel in May. As a result, the retail price for regular gasoline is expected to average $1.82 for the second half of 2004 after averaging $1.91 this summer.
However, the EIA report warned that "price spikes are still quite possible given the uncertainties surrounding Middle East instability, terrorism, Iraq, and the fact that, while more optimism for improvement is warranted, oil inventories worldwide are still low. In addition, currently low world oil surplus capacity levels provide an extremely limited cushion in the event of unexpected world oil market disruptions."
Publication date: 06/14/2004