WASHINGTON - Oil prices have climbed to record highs recently, with the price exceeding $90 per barrel, and even approaching $100. But the U.S. Department of Energy’s (DOE’s) Energy Information Administration (EIA) projects an eventual decrease in oil prices, assuming that oil producers will increase their output.
Despite the predicted decline, the EIA’s “Short-Term Energy Outlook” anticipates that crude oil prices will average $87 per barrel for the fourth quarter of 2007 and will average $80 per barrel for all of 2008. The EIA explains the high oil prices primarily as a case of supply not keeping up with demand, as the world experiences strong economic growth. The EIA projects surplus oil production capacity to remain fairly low through 2008, while oil inventories in industrialized countries, which are already at low levels, are expected to dip far below their five-year-average levels by summer of 2008.
But despite the supply crunch, the EIA projects increases of only 6 percent to 8 percent in the average cost of gasoline and diesel fuel in 2008, relative to the average price in 2007.