USA EIA Cuts Gasoline Price Forecast

The U.S. Energy Information Administration (EIA) lowered its U.S. retail gasoline price forecast for 2023 and 2024 in its latest short term energy outlook (STEO), which was released recently.

In its latest STEO, the EIA projects that the retail gasoline price will average $3.55 per gallon this year and $3.61 per gallon in 2024. The EIA expects the retail gasoline price to average $3.49 per gallon in the fourth quarter of this year, $3.42 per gallon in the first quarter of next year, $3.73 per gallon in the second quarter, $3.78 per gallon in the third quarter, and $3.48 per gallon in the fourth quarter of 2024, according to the November STEO.

In its previous STEO, which was released in October, the EIA projected that the retail gasoline price in the U.S. would average $3.62 per gallon in 2023 and $3.69 per gallon in 2024. In the October STEO, the EIA forecast that the retail gasoline price would come in at $3.74 per gallon in the fourth quarter of 2023, $3.63 per gallon in the first quarter of 2024, $3.81 per gallon in the second quarter, $3.76 per gallon in the third quarter, and $3.55 per gallon in the fourth quarter.

“U.S. regular gasoline retail prices declined throughout October, falling from $3.80 per gallon on October 2 to $3.47 per gallon on October 30 because of a sharp decline in wholesale gasoline margins that began in late September,” the EIA stated in its November STEO.

“We forecast retail gasoline prices to remain near $3.40 per gallon for the remainder of 2023, resulting in an average 2023 price of $3.55 per gallon. We forecast a similar average near $3.60 per gallon for 2024,” it added.

In its November STEO, the EIA noted that its forecast that retail gasoline prices will rise in 2024 primarily reflects a higher Brent crude oil price.

“We expect crude oil prices to contribute an additional 22 cents per gallon to the retail gasoline price in 2024 compared with 2023,” the EIA said in the STEO.

“However, we expect much of this increase to be offset by decreases in the wholesale gasoline margin over crude oil,” it added.

“We expect the wholesale gasoline margin with crude oil to average 52 cents per gallon in 2024, a decrease of 14 cents per gallon from the forecast 2023 average of 67 cents per gallon, resulting primarily from reduced demand for motor gasoline,” it continued.

USA Gasoline Consumption

Although the U.S. population has grown in recent years, the nation’s gasoline consumption has increased more slowly in comparison, meaning U.S. gasoline consumption has been decreasing on a per capita basis, the EIA stated in its latest STEO.

“Gradual improvements in fuel efficiency and the growing share of electric vehicles are reducing U.S. motor gasoline demand per capita,” the EIA said in the STEO.

“Our gasoline consumption forecast contains a variable for fuel economy that captures the combined effects that newer, more efficient internal combustion engine vehicles and electric vehicles have on gasoline consumption,” it added.

“Researchers at Argonne National Laboratory estimated electric vehicle adoption contributed to about 0.5 percent less U.S. gasoline consumption in 2021 than what would have otherwise occurred,” it continued.

“The effects of electric vehicle adoption on gasoline consumption have likely increased since 2021; however, lags in data on vehicle scrappage rates and evolving telework trends, among other factors, complicate the analysis of attributing the degree to which electric vehicles have caused more recent declines in gasoline consumption per capita,” the EIA went on to state.

In its November STEO, the EIA projected that the average person in the U.S. will consume 402 gallons of gasoline in 2024. The EIA highlighted in the STEO that this is down from a peak of 475 gallons per person in 2004.

“Because of lower per capita gasoline consumption, we forecast overall U.S. gasoline consumption to decline in 2024 to 8.83 million barrels per day, from 8.88 million barrels per day in 2023 and down from the 2019 pre-pandemic average of 9.31 million barrels per day,” the EIA said in the STEO.

Current Gasoline Price

As of November 17, the average price of regular gasoline in the U.S. is $3.333 per gallon, according to the AAA Gas Prices website.

Yesterday’s average was $3.342 per gallon, the week ago average was $3.390 per gallon, the month ago average was $3.584 per gallon, and the year ago average was $3.725 per gallon, the site showed. The highest recorded average price of regular gasoline in the U.S. was seen on June 14, 2022, at $5.016 per gallon, the site highlighted.

GasBuddy’s live ticking average for regular gasoline in the U.S. was $3.329 per gallon, as of 5.05am EST on November 17, which the organization outlined was down 41 cents from last year’s average.

According to the EIA’s latest gasoline fuel update, the average U.S. regular gasoline price was $3.473 per gallon on October 30, $3.396 per gallon on November 6, and $3.349 per gallon on November 13.

To contact the author, email andreas.exarheas@rigzone.com