Like it or not, $4 gas will be around for a while.
The U.S. Energy Information Administration delivered that bit of bad news this week in a report that forecasts tight supplies and high prices throughout the rest of 2008, despite waning U.S. demand.
The report, EIA’s monthly Short-Term Energy Outlook, came less than three weeks after it released a study that said drilling in the Arctic National Wildlife Refuge would not likely diminish the current oil crisis.
The administration, an independent analytical arm of the Energy Department, expects regular gas to average about $3.78 a gallon for the year. That is 97 cents more than in 2007. So far, a gallon has averaged about $3.37 in 2008. The current U.S. average is nearly $4.04. In order to match the EIA forecast, U.S. gas prices will have to average about $4.10 a gallon through the rest of the year.
Gas prices jumped more than 6 cents per gallon from June 2 to Monday, according to the EIA, on which Army and Air Force Exchange Service fuel prices are based. The American Automobile Association’s Daily Fuel Gauge Report pegged the national average for regular at $4.06 Thursday — another record.
For AAFES customers, $4.06 is but a distant memory. When prices are reset Saturday, AAFES’ cheapest fuel — regular gas in Germany — will cost $4.248 per gallon. Midgrade gas, which is the lowest grade sold in the Netherlands and United Kingdom, goes up to $4.81 and $4.292, respectively.
Diesel fuel is about $1.90 more now than it was a year ago in the U.S., even after two weeks of dropping prices. In the Netherlands, AAFES diesel falls to $5.331.
According to the EIA, global oil producers are pumping nearly as much as they can. That fact, along with rising global fuel consumption and lowered production from countries that do not belong to the Organization of Petroleum Exporting Countries, "reinforce the perception that supply is having a difficult time keeping up with demand growth," the report said. Those factors have accounted for much of the recent spike in oil prices, the report concludes.
In a study released May 22, the administration concluded that if drilling in the ANWR were approved immediately, oil production there wouldn’t begin for another decade. Under the best-case scenario presented, ANWR would yield about 1.45 million barrels of oil per day, but would likely produce closer to 780,000 barrels, at most. Americans consume an average of nearly 20.7 million barrels of oil per day, according to the EIA.
The study, requested by Republican Sen. Ted Stevens of Alaska, also concluded that production from ANWR would lower the price of a barrel of oil by anywhere from 41 cents to $1.44.
Light, sweet crude for July delivery fell $2.41 in early trading Thursday to $133.97 a barrel on the New York Mercantile Exchange, The Associated Press reported.