Feds Predict Higher Gasoline Prices
The EIA said gasoline demand will set a record in 2004, with 100,000 barrels per day (bpd) more than last year during the peak driving season, which traditionally begins in late May, EIA administrator Guy Caruso told a meeting of oil refiners in San Antonio, Texas.
"That's going to be a challenge of course because of the increased specification changes in requirements phasing out of low sulfur" and the MTBE-phaseouts in New York and Connecticut, and the continued transition in California, Caruso said.
"It's going to be, we feel, a continued a tight market and therefore our outlook for prices and margins are continued strength in both those areas," Caruso said.
The EIA forecast a U.S. average gasoline price of $1.67 per gallon for the full year 2004.
Caruso said this figure is up 10 cents from EIA's projection which was released just last month.
The EIA said its forecast for U.S. gasoline prices for April and May will be $1.83 per gallon for the national average due to fewer gasoline imports than last year.
Part of the reason is that finished gasoline imports are down 119,000 bpd at 351,000 bpd this year, according to the statistics arm of the U.S. Department of Energy.
The EIA forecast a U.S. average natural gas price of $5 per million British thermal units in 2004 and 2005, Caruso said. "EIA might be a little lower than some of the analyst estimates," he added.
Natural gas prices are not likely to drop until 2007 and 2008 when liquefied natural gas (LNG) regasification plants come on-line along the U.S. Gulf Coast, Caruso said.
Natural gas prices are important to refiners as natural gas is often used to generate electricity in refineries.
Imports of LNG will become increasingly important in the coming years because domestic drilling is not finding supply to meet rising demand, he said.
"These drilling rates have not been found to add to productive capacity," Caruso said.
EIA forecast domestic natural gas production will grow 1 trillion cubic feet by 2010 from the current 19.9 TCF, he said. Another 1 TCF is expected to be added by 2015.
Exports of natural gas from Canada, which has accounted for 15 percent of U.S. supply, are expected to continue declining until about 2009, when exports from Mackenzie delta begin.