Energy

US Summer Gasoline Prices Projected at 11-Year Low

Los Angeles
Thinkstock
The U.S. Energy Information Administration (EIA) released its latest update to the Short-Term Energy Outlook on Tuesday morning, and the latest revisions to the agency’s estimates spell good news for drivers and less-good news for crude oil producers.

According to the EIA, pump prices for the summer driving season (April through September) are expected to average $2.45 a gallon, compared with $3.59 a gallon in the same period last year. That calculates to year-over-year savings of $700 per household, and the lowest spending on motor fuel in the past 11 years.

The EIA is forecasting an average per barrel price for West Texas Intermediate (WTI) crude $52.48 in 2015, down from an average of $93.26 in 2014. The 2015 price for a barrel of Brent crude is now estimated at $59.32, down from $99 a barrel in 2014. For 2016 the EIA forecasts the WTI price at $70 a barrel and the Brent price at $75.03 per barrel.

U.S. production is forecast to fall from 9.37 million barrels of crude oil per day in April and May to 9.33 million barrels a day in June. The EIA expects production to bottom out at 9.04 million barrels a day in September, before climbing in the final three months of this year. Production in 2016 bounces around from 9.17 million barrels a day in January to 9.68 million barrels a day in December.

ALSO READ: The Happiest (and Most Miserable) Cities in America

The potential lifting of sanctions against Iran could cut the baseline projection for crude oil prices by $5 to $15 a barrel below the levels in the EIA’s latest forecast. Iran is thought to have some 30 million barrels of crude in storage and could ramp up production by a minimum of 700,000 barrels a day by the end of 2016.

For oil producers, Iran’s return to the market could not come at a worse time. The EIA projects global inventory growth will drop from a million barrels a day in 2015 to just 100,000 barrels a day in 2016. The agency concludes that Iran could add half a million barrels a day to the global supply, putting more downward pressure on pricing.

Get Ready To Retire (Sponsored)

Start by taking a quick retirement quiz from SmartAsset that will match you with up to 3 financial advisors that serve your area and beyond in 5 minutes, or less.

Each advisor has been vetted by SmartAsset and is held to a fiduciary standard to act in your best interests.

Here’s how it works:
1. Answer SmartAsset advisor match quiz
2. Review your pre-screened matches at your leisure. Check out the advisors’ profiles.
3. Speak with advisors at no cost to you. Have an introductory call on the phone or introduction in person and choose whom to work with in the future

Get started right here.

Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.