Oil prices are predicted to average more than $100 per barrel in 2008 before moderating in 2009, according to a new report from the Energy Information Administration.
The report, Short Term Energy and Summer Fuels Outlook, predicts that West Texas Intermediate (WTI) prices will increase from an average of $72.32 per barrel in 2007 to $101 per barrel in 2008. Prices will then drop to $92.50 per barrel in 2009.
Higher costs for crude oil are likely to contribute to higher petroleum product prices, according to EIA. The report predicts that gasoline prices will average $3.36 per gallon in 2008, up 55 cents from last year. Diesel prices are projected to show even larger increases in 2008, averaging $3.62 per gallon, or 74 cents above the 2007 average price.
Consumption of liquid fuels and other petroleum is expected to decline in 2008 by about 85,000 barrels per day (bbl/d) as a result of the economic slowdown and high petroleum prices. After accounting for increased ethanol use, U.S. petroleum consumption is projected to fall by 210,000 bbl/d in 2008.
U.S. real gross domestic product (GDP) is expected to decline in the first half of the year and then start growing again, according to EIA. Annual growth in 2008 is pegged at 1.2 percent, the slowest annual rate since 2001. An expected modest economic recovery in 2009, combined with lower petroleum prices, is projected to boost total U.S. liquid fuels and other petroleum consumption by about 200,000 bbl/d.
The Henry Hub natural gas spot price averaged $7.17 per thousand cubic feet (Mcf) in 2007 EIA says. The agency predicts it to average $8.59 per Mcf in 2008 and $8.32 per Mcf in 2009. Higher prices this year and next reflect continued strong demand, high oil prices, and the need to replenish more stocks this year than last year.
