EIA: crude oil, gasoline prices to dip in 1997

The U.S. Energy Information Administration predicts refiners will pay about 84¢/bbl less for imported crude oil this summer than last summer.

That in turn will result in average retail gasoline prices 1-2¢/gal below the 1996 summer average.

Gasoline, oil outlook

Jay Hakes, EIA administrator, said, "Even with record gasoline demand, we expect gasoline prices slightly below last summer's levels because of lower crude oil prices."

EIA's latest short-term forecast predicted U.S. summer gasoline demand will rise 1.8% in 1997-vs. a gain of 0.7% last year-to a record 342 million gal/day and continue the steady rise that began in 1991.

It predicted gasoline supply would be adequate to meet even stronger than expected demand, without a repeat of last year's price surge.

"This outlook depends partly on the ability of domestic refiners to reach record-high output levels and refinery utilization rates and partly on the ready availability of imported gasoline," EIA said.

It said world oil prices, already down sharply from high midwinter levels, are expected to remain generally below 1996 levels for the rest of this year. It does not anticipate further significant declines from the $19.75/bbl average in March.

"Relatively stable prices ranging around $19-20/bbl are expected over the next 7 quarters, as oil production increases to match continued worldwide economic growth through 1998."

Natural gas prices

EIA said the average natural gas wellhead price increased in 1996 by 45% over 1995 prices.

"The 1997 average annual wellhead price is projected to remain near 1996 levels if the weather is normal, as prices gradually decline from the high levels seen early this year.

"Average gas prices should continue to decline moderately in 1998. However, as experience in the past two winters has shown, sharp weather changes, especially a spring cold snap, could pull down storage levels and propel spot prices upward."

It said gas storage levels in the first quarter of 1997 were above last year's, as mild weather weakened demand.

"Barring a late-winter cold snap, underground gas storage levels are likely to be higher at the end of the heating season than at this time last year."