The U.S. Department of Energy predicts that the average price of diesel fuel will be 15 cents lower in 2014 than in 2013. The department’s Energy Information Administration makes the claim in the latest edition of the Short-Term Energy Outlook.
The agency believes diesel fuel will average $3.77 next year in the U.S. based on supply and demand across the globe.
Diesel currently averages $3.88 per gallon in the U.S., and the agency says it will have averaged $3.92 for the calendar year of 2013. Diesel averaged $3.97 per gallon in 2012.
EIA analysts say global demand for petroleum-based oil and fuel continues to grow, but so does the supply, and right now the supply is outpacing the demand. The effect has a weakening effect on prices for oil, diesel and gasoline, the agency says.
Tom Kloza, analyst and founder of the Oil Price Information Service, predicts diesel prices will average a nickel higher than the EIA’s prediction for 2014.
“Whatever we average in prices for 2013, the prices for both gasoline and diesel should be about 10 cents less per gallon in 2014,” Kloza told Land Line on Wednesday, Dec. 11.
He says domestic oil shale and natural gas production are beginning to insulate the U.S. from some of the energy volatility around the globe.
“Crude oil production is going to be higher in 2014 than it was in 2013. The oil shale boom is real,” he said.
Kloza says the U.S. does not have to carry the inventory it has historically, mainly due to the capabilities of U.S. refiners.
“We’re going to be OK this winter if the refineries work, and by that I mean inventories in the United States are pretty low when you compare five-year levels,” he said. “We are managing with tighter-than-ever inventories because we have the capability.”
Turning to gasoline, the EIA reported an average of $3.68 per gallon in July, but that dropped 49 cents to $3.19 by November.
A slight tightening of supply led to a $3.27 average for gasoline in December, but the agency is predicting a slight drop by the end of the year to $3.23. For the calendar year of 2013, the EIA says gasoline will have averaged $3.50 per gallon.
For 2014, the agency predicts an average of $3.43 per gallon for gasoline, 7 cents below the 2013 average.
The U.S. Energy Information Administration tracks supply, demand, consumption and reserves domestically and around the globe for many types of energy, including gasoline, diesel, natural gas, electricity, coal and renewable sources.
The Oil Price Information Service began covering petroleum news in 1977 and claims to be one of the world’s most comprehensive sources for pricing and information.
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