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U.S. ENERGY INFORMATION ADMINISTRATION WASHINGTON DC 20585 FOR IMMEDIATE RELEASE APRIL 3, 1997
The Energy Information Administration projects average retail gasoline prices for the 1997 summer driving season to be 1 to 2 cents per gallon below the 1996 summer average. "Drivers are not likely to see the type of sticker shock they experienced last year," Jay Hakes, EIA Administrator, said today in releasing the agency's latest Short-Term Energy Outlook. "Even with record gasoline demand, we expect gasoline prices slightly below last summer's levels because of lower crude oil prices," Hakes said. EIA expects the average cost of foreign crude oil to U.S. refiners (refiner acquisition cost) to be about 2 cents per gallon less than during the 1996 summer months. Meanwhile U.S. gasoline demand is expected to be up 1.8 percent, compared with 0.7 percent last year, raising summer gasoline demand to a record high of 342 million gallons per day and continuing the steady uptrend that began in 1991. In EIA's assessment at the outset of the driving season, gasoline supply is adequate to meet even stronger demand than expected, 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. World oil prices, already down sharply from high midwinter levels, are expected to remain generally below 1996 levels for the rest of 1997. EIA does not anticipate further significant declines from the current average (estimated at $19.75 per barrel in March). Relatively stable prices ranging around $19 to $20 per barrel are expected over the next 7 quarters, as oil production increases to match continued worldwide economic growth through 1998. Other highlights from the EIA quarterly Short-Term Energy Outlook include: Natural Gas Storage Comparisons to last year's slightly higher winter storage levels affected perceptions of the natural gas storage situation this winter and, together with cold weather in the beginning of the fourth quarter of 1996, caused gas prices to soar. Overall storage levels in the first quarter of 1997 were above last year's, as mild weather weakened demand. As a result, prices dropped dramatically in mid-February. 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. Natural Gas Prices The average natural gas wellhead price increased in 1996 by 45 percent 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. Electricity Demand In 1997, electricity demand is expected to grow at a slower pace than in 1996, as normal weather offsets the effects of strong economic growth. In 1998, demand is expected to rise along with the economy. Coal Production Coal production is expected to continue to grow during the forecast period, as production increases in the Western region offset declines in the Interior and Appalachian regions. U.S. electricity demand for coal and external demand for coal exports are the driving forces. The Short-Term Energy Outlook provides quarterly short-term energy supply, demand, and price projections for publication in January, April, July and October. To meet the public's demand for more timely availability of energy data and forecasts, the Short Term-Energy Outlook is now being released on Internet more than a week earlier than its actual publication. The Outlook is available on Internet as of April 3; the published version is expected to be available about 10 days later. Internet access to the Short-Term Energy Outlook can be obtained through the EIA Home Page on the World Wide Web system. The Internet address is http://www.eia.doe.gov/emeu/steo/pub/contents.html Copies of the Short-Term Energy Outlook, Second Quarter 1997 are available from the U.S. Government Printing Office, 202/512-1800, or through EIA's National Energy Information Center (NEIC), 202/586-8800.
EIA Press Contact: Thomas Welch, 202/586-1178 EIA-97-11 Contact:
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