Summer Gasoline Forecast: Average Price to Drop One Cent to $3.57/Gallon

Image: Summer Gasoline Forecast: Average Price to Drop One Cent to $3.57/Gallon

Wednesday, 09 Apr 2014 10:02 AM

By Michael Mullins

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This summer's gasoline prices will give drivers a very slight reprieve, as the Energy Department forecasts the national average will fall by just one cent — to $3.57 a gallon — between April and September.

Despite the measly drop, the rate is the lowest drivers have seen since 2010, The Associated Press reported.

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According to the Energy Department's Energy Information Administration, U.S. drivers are expected to use slightly more gasoline than they did last year. Considering the demand for oil continues to grow around the world, it should result in significantly higher prices at the pump. However, supplies are presently outpacing demand due to increased production in the U.S., Canada, and elsewhere, which accounts for the slight drop.

According to the EIA, domestic refinery production may rise by 60,000 barrels a day over the coming months, while total net gasoline imports average 240,000 barrels a day, about 7 percent lower than in 2013, Bloomberg News reported.

"The price forecast is based on what’s happening with world crude oil prices and our expectations for Brent crude oil," EIA administrator Adam Sieminski said in a conference call, the Kansas City Star reported. "Supply, demand, and other events might impinge on either of those two things."

An example of "other events" that could impact the price of crude is the current turmoil in  Ukraine. The turmoil could disrupt Russian oil from flowing to Europe, forcing the continent to satisfy its oil needs elsewhere, thereby driving up prices in other markets.

According to Sieminski, political unrest around the world has resulted in an increase of oil reserves not being exposed to the market as compared to past years. The EIA administrator added that presently some 2.5 million barrels of oil per day are kept off the market, about 3 percent of world demand, which is up from 500,000 barrels historically.

Chief oil analyst at OPIS and GasBuddy.com, Tom Kloza, told the AP that he predicts the price of gasoline will continue to rise slightly until it peaks in late April at about $3.65, at which point it will decrease going into the summer months. 

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