WASHINGTON - The spot price for crude oil briefly hit $100 per barrel on Jan. 2, settling at a record nominal price of $99.64 per barrel. According to the U.S. Department of Energy’s (DOE’s) Energy Information Administration (EIA), the record price reflects the current tight and volatile world market for crude oil, and the market is expected to remain tight throughout 2008.

Oil suppliers that are not part of the Organization of Petroleum Exporting Countries (OPEC) will not be able to keep pace with increasing oil demand this year, so developed countries will either count on increases in OPEC production or will have to draw on their stored inventories of crude oil. With the supply situation remaining tight, EIA’s latest “Short-Term Energy Outlook” expects crude oil prices to average $94 per barrel for January and to average $87 for the year as a whole. By 2009, increased oil production should ease the supply crunch, dropping average crude oil prices to $82 per barrel.

The oil prices will be felt at the pump, with the price for regular gasoline peaking near $3.50 per gallon this spring, and both gasoline and diesel prices averaging greater than $3 per gallon for the next two years. Regular gasoline is expected to average $3.14 per gallon in 2008, dropping to $3.03 per gallon in 2009, while diesel fuel prices are expected to average $3.29 per gallon in 2008, dropping to $3.15 per gallon in 2009. The oil prices will also impact those households using heating oil, as its price is expected to average $3.19 per gallon in 2008, dropping to $3.01 per gallon in 2009.

Publication date: 01/14/2008