May 15, 2006: Costly Crude Oil to Keep Gasoline Prices High Through 2007
The EIA expects fuel prices to be lower by September, although any news of tropical storms or hurricanes that threaten Gulf Coast energy production "could add to volatility in near-term prices in the latter part of the summer." According to the American Automobile Association's Fuel Gage Report, the average U.S. price for regular gasoline is currently at $2.90 per gallon.
The EIA blames the high gasoline prices on the elevated prices for crude oil, which is expected to average $68 per barrel through 2007. According to EIA, growing world demand for petroleum has reduced the world's surplus oil production capacity to about 1 million barrels per day, compared to 1.8 million barrels per day at the end of 2003.
"Both the inability of world oil producers to increase production capacity to meet growing demand and growing concern about the security of supplies have contributed to rising crude oil prices," concludes the EIA. And unfortunately, "the prospects for significant improvement in the world petroleum supply and demand balance appear to be fading."
Publication date: 05/15/2006