Retail diesel prices are projected to average $2.96 per gallon in 2008, a 14-cent increase from the average of $2.82 thus far in 2007, according to the U.S. Energy Information Administration in a report released Tuesday, Oct. 9.
As the winter fuel season began Sept. 30, distillate inventories including diesel and home-heating oil had decreased 13 million barrels to 136 million barrels, but were still within a normal five-year average, EIA officials stated in the Short-Term Energy and Winter Fuels Outlook.
By March 2008, those inventories could fall to 115 million barrels but remain within a normal range even if winter weather turns colder than normal, the EIA outlook stated.
One year ago, the EIA predicted that the national average for diesel fuel in 2007 would be $2.66 per gallon. The year-to-date average was $2.82 per gallon at press time in mid-October, and it was increasing, not decreasing.
For the week of Oct. 9, the national average diesel price was $3.03 per gallon.
Residential heating oil will likely rise 40 cents per gallon from $2.48 to $2.88 in 2008, the EIA reported.
Global oil supply is predicted to increase between 1 percent and 2 percent, which will barely keep up with demand.
The EIA predicts that crude oil prices should drop below the recent price of $80 per barrel, but remain above $70 per barrel. Specifically, the average price per barrel for crude will be $73.50, based on a slight production upturn in non-OPEC countries and a modest increase of 500,000 billion barrels per day from OPEC.