Big hike in fuel costs expected
Forecast sees big summer demand
Drivers eager to get back on the road more than a year into the pandemic will face the highest summer gasoline prices since 2018, according to a U.S. government report.
Prices at the pump will average $2.78 a gallon from April to September in the U.S., more than 30% higher than last summer. While COVID-19 will continue to affect petroleum markets this summer, more vaccinations combined with U.S. fiscal stimulus will support the economic recovery and drive demand growth, the Energy Information Administration said in its annual Summer Fuels Outlook report on Tuesday.
“The higher price in 2021 results from our forecasts of higher crude oil prices this summer and greater gasoline demand as the effects of the COVID- 19 pandemic continue to subside and travel increases,” said EIA Acting Administrator Steve Nalley. “We forecast 15% more highway travel this summer as a result of rising employment, easing regional restrictions designed to slow the pandemic, and increasing overall economic activity as vaccination rates increase.”
The fuel demand recovery in the world’s largest oil consumer will be closely watched to see if a vaccine rollout that’s been gathering momentum will be enough to lure travelers out in force. While more than 100 million Americans have gotten at least one dose, vaccine campaigns in other parts of the world such as Europe have been shakier, threatening to limit a rebound in global travel.
The EIA expects U.S. gasoline consumption to increase this summer compared with last summer, but it doesn’t see demand returning to 2019 levels. Gasoline consumption from April to September will rise to 8.84 million barrels a day from 7.81 million in 2020. Consumption in 2021 will peak at 9.1 million barrels a day in August.
Nationwide retail diesel prices are seen rising to $2.96 a gallon from $2.43 a gallon in the summer of 2020.
Ethanol blending will likely average 898,000 barrels a day this summer, up from 797,000 barrels a day last year.