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EIA ReportsU.S. ENERGY INFORMATION ADMINISTRATION Summer Gasoline Prices To Remain High Average spring/summer gasoline pump prices are expected to remain high at $1.49 per gallon, lower than last year's average of $1.53 per gallon, but still the second highest summer average on record. This forecast, released today by the Energy Information Administration (EIA) in its Short-Term Energy Outlook, assumes no unplanned refinery outages or distribution bottlenecks. U.S. crude oil and gasoline inventories are below normal and are expected to remain low through the driving season and into the fall. Therefore, price volatility remains a possibility this summer. While there are reasons to believe that summer gasoline costs may not rise much above current levels, some of the same conditions that contributed to sharply rising prices last year are reappearing this spring, such as low inventories and high crude oil costs. Other highlights for the Short-Term Energy Outlook include: * Signs of continued slowing in the U.S. economy have resulted in lower assumed growth rates of real GDP in 2001 and 2002. We now expect the economy to expand by 1.9 percent this year and 3.4 percent in 2002. The weaker growth (compared to the 5 percent growth seen in 2000), combined with an upward revision in oil inventories in the industrialized countries at the end of 2000, would have resulted in some weakening of world oil prices but these factors have been offset by OPEC's announcement of a second round of output cuts since January. The average cost of imported oil to the United States is expected to be about $25 per barrel in 2001 and about $26 per barrel in 2002. * Natural gas in underground storage reached the lowest levels ever recorded by EIA at the end of a heating season on March 31. This development has set the stage for continued high spot and wellhead prices that will be sensitive to variations in summer weather conditions that could lead to high electricity demand and competition for gas needed for storage injections. Only sharply higher-than-expected production performance or a sharper-than-anticipated downturn in industrial activity this year will ease continued upward pressure on gas spot prices. Spot prices are now projected at between $4 to $5 through the end of summer. * Bolstering the strength of underlying gas demand are the expectations that hydroelectric and nuclear power availability this summer are likely to fall below levels seen during the summer of 2000 due to low precipitation rates and plant outages due to required maintenance. We expect, for example, that hydroelectric output in the Pacific Census Division (California, Oregon and Washington) will be about 8 percent below 2000 levels this summer. * Summer electricity demand in 2001 is likely to exhibit somewhat slower growth than that seen last summer, partly because of the assumption of normal weather this summer. A more important factor in this expectation is a dramatically lower rate of growth in the economy. We are currently pegging year-to-year growth in real GDP for the summer at 1.5 percent compared to a rate last summer that exceeded 5.5 percent. Any growth at all may strain power resources that are already near the limit, the Pacific Region of the United States being a prime example. The fact that California has already experienced blackouts in 2001 does not bode well for the chances of getting through the summer without serious power supply problems in at least one key area of the country. The Short-Term Energy Outlook is published monthly on EIA's Internet Web site to meet the public's demand for more timely energy data and forecasts. Users can view and download the forecast analysis, tables and charts by going to the EIA Home Page at http://www.eia.doe.gov and selecting Short-Term Outlook under the column headed Featured Topics. The Internet address for direct access to the Outlook is: http://www.eia.doe.gov/emeu/steo/pub. The Short-Term Energy Outlook is no longer published in printed form.
EIA Press Contact: David Costello, 202/586-1468 EIA-2001-07 Contact:
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