The New Normal
Get used to $4 gas — the Energy Department says you’ll be shelling out at least that much through the end of next year.
The latest edition of the Energy Information Administration’s Short-Term Energy Outlook estimates that oil will average $127 per barrel this year and $133 per barrel next year, driven by “significant demand growth in China, the Middle East, and Latin America.”
Meanwhile, according to EIA’s latest weekly petroleum report, the average U.S. retail price for gas has hit new records. Last week the average rose to more than $4.11 per gallon — from almost $3.96 a gallon on the Gulf Coast to $4.55 in California.
A glimmer of good news is that U.S. petroleum consumption is expected to decline by about 530,000 barrels per day in 2008, thanks in large part to increased ethanol production.
Ethanol and other biofuels are the biggest sources of increased fuel supply on the world market today. Without them, according to Merrill Lynch, the average retail price of gas would be 50 cents a gallon higher.
Sources:
Energy Information Administration. “Short-Term Energy Outlook.” July 8, 2008.
Energy Information Administration. “This Week In Petroleum.” July 9, 2008.
Merrill Lynch. “Biofuels driving global oil supply growth.” Global Energy Weekly, June 6, 2008.
