By the OGJ Editors
WASHINGTON, DC, Apr. 8 --US gasoline pump prices for spring and summer 2002 are expected to average $1.46/gal, about 8¢ lower than last year's average of $1.54/gal, according to new Energy Information Administration projections.
"In general, motor gasoline market conditions in the United States are less tight at the beginning of the driving season this year than they were in 2001," EIA officials said.
Motor fuel demand traditionally rises after the Memorial Day federal holiday at the end of May.
Caution remains
However, EIA cautioned that sharply higher crude oil prices over the past few months and tightening oil markets worldwide have moved gasoline prices up rapidly this spring from winter lows.
"US crude oil and gasoline inventories are now above last year's levels but are expected to decline to less ample levels through the summer and into the fall. US motor gasoline inventories were 8.8 % (17 million bbl) above year-ago levels at the end of March," EIA said.
This year, average gasoline prices will most likely remain below the 2001 average for the driving season, but there is a slight possibility that they could be higher than last summer's levels, especially if refining problems develop or the crude oil market gets tighter, EIA said.
Even with a larger inventory cushion this year at the start of the driving season, the summer average for nominal pump prices is expected to be the third highest on record, after 2001 and 2000. Adjusting for inflation, the all-time record summer gasoline price was recorded in 1980, when it was $2.65/gal in 2001 dollars.
Looking at oil markets, EIA said average crude oil prices moved up rapidly in March to $24.50/bbl from the average February level of $20.75/bbl for West Texas Intermediate. The average WTI price for 2002 is now projected at about $25.00/bbl, EIA said.
"Continued strong compliance by the Organization of Petroleum Exporting Countries producers to current quotas and continued economic recovery in 2002 are important factors in our forecast for oil prices this year. Questions about the extent of the non-OPEC production response, worldwide economic strength, and other factors result in uncertainty concerning potential oil prices over the next 7 quarters."
Gas, electric
US dry natural gas production is projected to fall by about 4.7% in 2002 compared with the 2001 level. Natural gas storage levels were projected to end the heating season [Mar. 31] at 1,569 bcf, more than double the 742 bcf seen at the same time last year, EIA said.
"Despite rising demand stemming from lower relative natural gas prices, particularly in the industrial and electricity generating sectors, there is a strong possibility of spot gas prices slipping to about $2.40/Mcf by midsummer from the current range of over $3.00/Mcf," EIA said.
Depending on weather and overall market conditions, natural gas prices are expected to be $2-3/Mcf for most of the year, with higher ranges likely entering the next heating season, EIA predicted.
This summer, total electricity demand (retail sales plus industrial generation for own use and other direct sales) is expected to be nearly level with last summer's demand due to both weather and economic factors.
"Total annual electricity demand growth is estimated to have been . . .-0.7% in 2001 but is expected to begin to revive slightly in 2002 and to grow by 3.2% in 2003," EIA said. Midwinter heating demand and a solid recovery in the industrial sector are expected to yield higher growth in 2003," EIA said.
