EIA Outlook: Highway Fuel Prices in 2015, 2016 to Remain Well Below 2014 levels

AASHTO Journal, 16 January 2015

Gasoline and highway diesel fuel prices will probably remain substantially below 2014 levels for both this year and next, the U.S. Energy Information Agency predicted in its latest short-term energy outlook.

While the agency warned that right now there is “high uncertainty in the price outlook,” it looked for average U.S. motor fuel prices to edge up marginally in 2015 from current levels before rising further in 2016.

U.S. Gasoline and Crude Oil Prices

The agency noted that the national average retail gasoline price was down to $2.14 a gallon in its Jan. 12 weekly survey of fueling stations, the lowest since May 4, 2009. The EIA projected an average price across the 2015 first quarter of only $2.16, and even with some pickup later this year it estimated gasoline pump prices would average just $2.33 for all of 2015.

That would still be down substantially from a $3.36 average last year, so the EIA said that “the average household is now expected to spend about $750 less for gasoline in 2015 compared with last year because of lower prices.”

Agency forecasters believe that when oil prices begin rising again this year they won’t rise very quickly, allowing for an average gasoline price in 2016 of $2.72. That would be a substantial increase from current levels but still well below what drivers have seen in years. During 2014, for instance, the national average pump price stayed above $3 until November.

The EIA predicted that retail prices for diesel fuel — used by a growing number of passenger cars and light trucks but mainly used by the nation’s commercial trucks – will fall to an average of $2.85 a gallon in 2015 from $3.83 in 2014, then reach an average of $3.25 in 2016.

While the forecast is a cheery one for average household savings on motor fuel bills, it could have a mixed impact on policymakers trying to come up with new infrastructure revenue.

In some state governments and in Congress, many officials are saying the time is right to increase motor fuel taxes as a primary “user fee” for the highway network. However, some states tax petroleum fuels at least partly as a percentage of its wholesale price, and those are seeing their revenue outlook worsen. (See related story in Nation section of this week’s Journal.) And some other states where there is substantial oil production have large chunks of their general budgets tied to oil pricing.

Meanwhile, the downtrend in national fuel prices continued in recent days.

The AAA motor club, which conducts a daily survey of fueling stations, said the Jan. 15 national average gasoline price was down to $2.085, from $2.182 a week earlier.

Earlier that week, AAA said average gas prices were already below $2 in 11 states, and estimated 25 states could see below-$2 averages in the week ahead.

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