EIA Forecasts Lower 2013 and 2014 Gasoline Prices

Lower average prices of gasoline can be expected by Americans this year as well as in the coming year.

According to the forecast of the U.S. Energy Information Administration (EIA), the current gasoline price will end the coming year at an average of $3.44 per gallon and, further, drop next year to $3.34 per gallon. Both forecasts are lower compared to the recorded annual average at the pump in 2012, which was at $3.63 per gallon.

The agency’s forecast is great news for some states and regions across the Midwest because the average price of regular gasoline in those parts of the country was often cheaper compared to the national average.

Chief Economist John Felmy of the American Petroleum Institute (API) said that the reason for the lower annual price forecast is that a lot of the region’s refineries can handle crude oil coming from Canada, which is cheaper compared to the best oil price per barrel posted every day on the New York Mercantile Exchange (NYMEX). Moreover, Canadian crude is much cheaper compared to the price of many international crude blends that refineries in other regions of the U.S. must utilize.

The declining forecast of gasoline prices is linked by the EIA to the fall in current oil prices. According to the agency’s prediction, the daily oil production of the U.S. will keep on growing this year and the next to 7.3 million barrels and 7.9 million barrels, respectively, from last year’s daily average of 6.4 million barrels. Shale wells will be the source of most of the new oil.

By: Chris Termeer

Chris Termeer

Chris Termeer is an oil and gas consultant, industry commentator and analyst. His book, Fundamentals of Investing in Oil and Gas provides a comprehensive overview of all aspects of the oil and gas industry, including exploration, drilling, production, storage, transportation and refining, to name but a few.

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