World demand for oil is growing, but supplies are growing faster than demand
By Jonathan Fahey
AP Energy Writer
NEW YORK (AP) — Drivers will get the slightest of breaks on gasoline prices this summer, according to the Energy Department.
The national average price is forecast to fall — by just one cent — to $3.57 a gallon between April and September, the months when Americans do most of their driving.
Still, that would be the lowest average summer price since 2010.
For the year, the department’s Energy Information Administration expects gasoline to average $3.45 a gallon, down from $3.51 last year and also the lowest since 2010.
World demand for oil is growing, but supplies are growing faster than demand, thanks to higher production in the U.S., Canada and elsewhere. That will keep a lid on the price of crude and gasoline.
The price of Brent crude, a benchmark used to price oil used by many U.S. refineries and the most important factor in gasoline prices, is forecast to fall 4 percent this year.
U.S. drivers are expected to burn slightly more gasoline than they did last year, according to the EIA. More people will drive more miles as the economy continues to improve, but they are driving more fuel efficient cars. That will prevent gasoline demand from rising as fast as the number of miles driven.
EIA Administrator Adam Sieminski warned in a conference call with reporters Tuesday that unexpected factors such as refinery outages, pipeline problems or geopolitical events that disrupt crude flows could send prices quickly higher.
The sudden return of supplies could also send prices lower. The average price of gasoline last summer was five cents lower than what EIA had forecast last spring.
Sieminski said that the amount of oil kept out of the market because of political unrest and logistical factors around the world is far higher now than in the past. Turmoil in Libya, Sudan and elsewhere is keeping about 2.5 million barrels per day of oil off the market, about 3 percent of world demand, up from 500,000 barrels historically, he said.
That has kept the price of Brent crude higher than anticipated in recent months, and it has led to slightly higher gasoline prices than forecast.
The average price of gasoline in the U.S. was $3.59 a gallon Tuesday, the same as last year at this time, according to AAA, OPIS and Wright Express. It has risen steadily since it was $3.27 in early February, as it does almost every late winter and early spring while refiners shut down plants for annual maintenance and switch to more expensive summer blends of gasoline designed to meet clean air rules.
Tom Kloza, chief oil analyst at OPIS and GasBuddy.com, predicts gasoline will continue to rise slightly until it peaks at about $3.65 a gallon in late April, before drifting lower.
That would make for an annual peak lower than last year’s $3.79 a gallon and 2012’s $3.94 a gallon.
