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US Gas Prices Expected to Remain Low Through Summer

The Energy Information Administration forecasts domestic prices at the pump to remain lower through the summer of 2013 as a result of a spike in supply over the last several months. The EIA projects:

“Falling crude oil prices contributed to a decline in the U.S. regular gasoline retail price from a year-to-date high of $3.78 per gallon on February 25 to $3.52 per gallon on April 29. EIA expects the regular gasoline price will average $3.53 per gallon over the summer (April through September), down $0.10 per gallon from last month’s STEO. The annual average regular gasoline retail price is projected to decline from $3.63 per gallon in 2012 to $3.50 per gallon in 2013 and to $3.39 per gallon in 2014.”

The ramped-up exporting of domestic petroleum will also serve to exacerbate this trend. NPR reporter Daniel Karson reports:

“… increased U.S. petroleum exports could keep domestic prices from taking a sharp dive, despite a slight slump in demand.

‘U.S. refineries are also exporting a record amount of diesel and gasoline to developing countries, including China, where demand for diesel is through the roof,’ Diane reports.

Oil industry analyst Patrick DeHaan tells Diane that if gas companies ‘build domestic inventories too much, it will hurt their bottom line. Maintaining exports while not allowing inventories to grow out of control, is what they’re likely trying to accomplish.’”

Still, it is imperative to mind the potential for geopolitical developments to undercut currently forecasted trends. As the EIA notes in its own report: “Energy price forecasts are highly uncertain, and the current values of futures and options contracts suggest that prices could differ significantly from the projected levels.”

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