Motorists can expect gasoline prices around $4 gallon through next year, the Energy Department said Wednesday, with oil prices staying well above $100 a barrel.
Crude oil prices are likely to average $126 a barrel in 2009, $4 higher than this year, as oil supplies and demand are expected to remain tight, Guy Caruso, head of the department’s Energy Information Administration, told a House hearing.
Gasoline prices are likely to peak at $4.15 a gallon in August and won’t go down much after that, the agency projected in a report. Gasoline was forecast to average $3.92 a gallon through 2009.
The agency said that the high price of gasoline has reduced expected demand for this summer, but not enough to dampen prices.
Caruso told House members that new auto fuel economy requirements and the increased use of ethanol and other alternative fuels are expected to produce “a substantial reduction” in oil use and oil imports over the next two decades.
Predicting future oil and gasoline prices is highly uncertain with the volatile global oil markets, Caruso acknowledged. The agency projects oil prices declining to $86 a barrel in 2010 and then increasing to $107 by 2015.
Overall U.S. oil consumption is expected decline over the next two decades because of the production of more fuel-efficient cars and the growing use of ethanol as a motor fuel, Caruso said. Both were required by Congress last December.
Crude prices, meanwhile, soared Wednesday well above Caruso’s projections as his agency announced that U.S. oil inventories fell more than expected last week. Light, sweet crude for July delivery jumped $4.50 to nearly $136 a barrel on the New York Mercantile Exchange.
Oil inventories fell by 4.6 million barrels last week, a much larger amount than had been predicted by analysts.