Tuesday, April 6, 2010

Short-Term Energy and Summer Fuels Outlook

The Energy Information Administration (EIA) has released their projections for West Texas Intermediate (WTI) crude oil, regular-grade motor gasoline, and Henry Hub natural gas. The EIA provides information and data covering energy, and prepares analyses and reports on topics of current interests. The projections for WTI crude oil spot prices have changed very little over the last five Outlooks, and they expect prices to average $81 per barrel this summer. Also, they project prices to average $85 per barrel by the fourth quarter of 2011. The strong global economic recovery will help keep prices firm over the next few months while several outside factors including the strength of the recovery and OPEC production could impact their projections.

As you may have noticed over the past few months, gasoline prices have been steadily climbing towards the $3 per gallon range. Well, the EIA forecasts that regular-grade motor gasoline retail prices will average $2.92 during the summer driving season and prices could even exceed $3 at various times during the season. Although consumers seem to have taken the steady rise in prices in stride, they are becoming increasingly burdened by the additional cost. If you recall the June 2008 high in price was $4.10 per gallon but I don’t think we need to see anything close to that level before the Federal Reserve starts to worry about commodity inflation.

For those interested in the full report it is found at the following address:http://www.eia.doe.gov/emeu/steo/pub/contents.html?featureclicked=5&