WASHINGTON - With crude oil prices now reaching $120 per barrel, oil prices for 2008 are expected to average $110 per barrel, according to the U.S. Department of Energy’s (DOE’s) Energy Information Administration (EIA). The EIA also projects that oil prices will remain high in 2009, averaging $103 per barrel, up from $92.50 per barrel in last month’s forecast.
The EIA’s latest “Short-Term Energy Outlook” expects gasoline prices to continue rising in response to the high oil prices, with the monthly average regular-grade gasoline price reaching a peak of $3.73 per gallon in June. Prices for regular gasoline are projected to average $3.66 per gallon for the summer driving season (April through September) and $3.52 per gallon for the year as a whole. Diesel fuel prices are expected to average $3.94 per gallon for 2008, declining to $3.67 per gallon in 2009.
The EIA blames the latest price increases on supply disruptions in Nigeria and the North Sea and warns that the global oil system is operating near its capacity, remaining vulnerable to both actual and perceived supply disruptions. The agency expects crude oil production capacity to increase by early next year, providing some spare capacity to ease the upward pressure on oil prices.