EIA Expects $4.15 Gas Peak in August

The Energy Information Administration (EIA) issued its Short-term Energy Outlook today, projecting that the national average price for regular unleaded gasoline will peak in August at $4.15 per gallon. The EIA now expects regular-grade motor oil to average $3.78 per gallon at retail this year, an adjustment of more than 25 cents from its projection last month.

“This forecast reflects a sizable narrowing of refiner gasoline margins from those of last year because of weakness in gasoline demand and growth in ethanol supply,” the EIA reported.

The agency also adjusted its gas price projections for next year, expecting regular unleaded to now average $3.92 per gallon in 2009 — 48 cents higher than it had previously forecast.

Crude oil prices for West Texas Intermediate (WTI), which averaged $72 per barrel in 2007, are projected to average $122 per barrel this year, an increase of $12 per barrel from the agency’s forecast last month. The EIA now expects WTI to average $126 per barrel in 2009, up more than $20 per barrel from its last report.

In addition, diesel fuel retail prices this year and next year are projected to average $4.32 per gallon, up from $2.88 per gallon last year. “This reflects strength in diesel demand, particularly in emerging markets, that has significantly increased the margins between diesel prices and crude oil costs from those of last year,” the EIA said.

Diesel fuel prices are projected to remain near the June 2 price of $4.71 per gallon over the next few months, as refiner margins begin to weaken slightly, offsetting the projected rise in crude oil costs, the agency said.