By David Tanner, Land Line associate editor
Summer is around the corner and so are summer fuel prices. According to one federal agency that tracks energy markets, it looks as if the average price of diesel is going to remain above $4 per gallon for the foreseeable future.
According to the U.S. Energy Information Administration’s latest Short-Term Energy Outlook released April 12, diesel fuel will average $4.09 this summer. Keep in mind that the EIA’s figure is just a projection and has been known to change month to month.
The EIA’s diesel forecast is for the summer months only. The agency’s latest Outlook did not project a yearlong average for calendar year 2011 as some of their reports do. In the March Outlook, for example, forecasters said diesel would likely average around $3.83 for the calendar year.
But taking the latest summer projection into account, prices would have to drop significantly in the fall for the average to dip below $4.
Diesel prices have gone up nearly every week since hitting the $3 in October/November 2010, and the EIA routinely adjusts its projections accordingly.
Let’s turn to oil for a minute.
Light sweet crude, the type most commonly associated with diesel fuel, has shot up significantly in recent weeks and so have the EIA’s projections. EIA uses West Texas Intermediate (WIT) crude as a spot-market price benchmark in its projections.
EIA forecasters stated in February that crude oil would likely average $91 a barrel for 2011. But in the April Outlook, forecasters said crude oil would likely average $105 for the year. That’s a difference of $14 in the projection in just two months. A lot has happened in those two months, too.
Forecasters point to political uprising in the Middle East and Libya as a source for global price swings in crude oil, diesel fuel and gasoline. Refinery capacity, supply and demand, and the import-export markets also have an effect on prices, as do oil-market speculators.
Click here to view the EIA’s Short-Term Energy Outlook for April. The site also includes archives of past Outlook reports.
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