U.S. ENERGY INFORMATION ADMINISTRATION
WASHINGTON DC 20585
FOR IMMEDIATE RELEASE
July 10, 1998
Reign of Lower Gasoline Prices Continues
The Energy Information Administration (EIA) expects summer gasoline prices to remain well below year-ago levels. According to information released today in the Short-Term Energy Outlook, U.S. summer retail gasoline prices are likely to remain at an average of about $1.04 per gallon for regular unleaded fuel, slightly below the observed average for the first quarter of 1998. This represents a downward revision to previous EIA gasoline price forecasts. The new outlook implies an average summer gasoline price about 16 cents per gallon below the year-ago level.
Despite much lower gasoline prices and strong economic growth this year, EIA expects summer gasoline demand to be less than 2 percent above the 1997 level. Gasoline demand growth was strong in the first quarter of 1998 but growth in subsequent months has been weak.
Contributing to the lower gasoline prices is the fact that EIA has also lowered its forecast for crude oil prices through the next six quarters, with the 1998 average price now expected to be nearly $6 below the 1997 level of $18.57 per barrel. The cumulating excess of world petroleum supply over demand caused world crude oil prices to fall to 9-year lows this spring.
Other highlights from the Short-Term Energy Outlook include:
- The slightly more bearish oil price outlook stems from several factors, including: 1) Asian oil demand continues to weaken; 2) U.S. demand growth has been below expectations despite continued solid economic growth; 3) the economic situations in Japan and the former Soviet Union remain uncertain. Unless oil production cutbacks exceed expectations, world petroleum stock levels could remain high through the rest of 1998.
- In response to weak prices, major world oil suppliers have pledged significant production cuts for the second time in three months. However, likely implementation of the cuts pledged to date by both OPEC and non-OPEC producing countries is expected to do little more than keep oil prices above recent lows for the rest of the year.
- Total natural gas demand is now expected to be down 1.6 percent in 1998. Very high current levels of gas in storage suggest the potential for renewed downward pressure on gas prices, especially if summer cooling demand fizzles. While growth in demand for natural gas at electric utilities has been positive this year, demand in the industrial sector has fallen. The initial estimate of first-quarter data shows a surprising 5.1 percent decline in industrial gas use compared to the same period in 1997. This has occurred despite a 3.4 percent increase in industrial output by gas-intensive manufacturing industries and a sharp decline in year-over-year gas prices.
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 "Forecasts" from the menu. The Internet address for direct access to the Outlook is: http://www.eia.doe.gov/emeu/steo/pub/contents.html. In addition to the Internet releases, the Short-Term Energy Outlook is published in printed form in January, April, July and October.
Printed copies of the Short-Term Energy Outlook, July 1998 will be available later this month from the U.S. Government Printing Office, 202/512-1800 or through EIA's National Energy Information Center 202/586-8800.
| The report described in this press release was prepared by the Energy Information Administration, the independent statistical and analytical agency within the U.S. Department of Energy. The information contained in the report and the press release should be attributed to the Energy Information Administration and should not be construed as advocating or reflecting any policy position of the Department of Energy or any other organization. |
EIA Program Contact: David Costello, 202/586-1468
EIA Press Contact: National Energy Information Center, 202/586-8800
EIA-98-14
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