|The EIA forecasts a decline in gasoline and diesel consumption in 2008. Click to enlarge.|
Based on projections of weak economic growth and continuing record high crude oil and product prices, the US Department of Energy’s (DOE) Energy Information Administration (EIA) is forecasting a decrease in consumption of gasoline, diesel and other petroleum products in 2008 by about 85,000 barrels per day (bbl/d). This represents the first year-on-year decline of consumption of motor gasoline in the US since 1991.
The EIA expects that a modest economic recovery in 2009, combined with slightly lower petroleum prices (an average $92.50 per barrel in 2009, compared to an average $101 per barrel in 2008) will boost total US liquid fuels and other petroleum consumption by about 200,000 bbl/d next year.
|Percentage annual change in gasoline consumption. Click to enlarge.|
The EIA made its projections in the April edition of the Short Term Energy Outlook (STEO). The EIA also forecasts that world oil consumption will grow by 1.2 million bbl/d in 2008.
Summer Fuels Outlook in the US. The EIA projects that average regular grade gasoline retail prices, which averaged $2.93 per gallon last summer will increase to an average $3.54 per gallon during the current driving season. The agency expects diesel fuel prices, which averaged $2.85 per gallon last summer, to average $3.73 this summer.
EIA anticipates that the monthly average gasoline price will peak at just over $3.60 per gallon in June, while the monthly average diesel price will peak at just over $3.90 per gallon in April.
These retail price projections reflect higher prices for the refiner’s average acquisition cost of crude oil, projected to average almost $97 per barrel, up from about $67 per barrel last summer. However, for motor gasoline these projections indicate a narrowing of the difference between the gasoline retail price and the average cost of crude oil, due largely to the weak gasoline demand, high inventories, and growth in ethanol production. While the average cost of crude oil is projected to increase by about 70 cents per gallon this summer over last, the average gasoline retail price is expected to increase by only 60 cents. In contrast, summer diesel fuel prices are projected to increase by 87 cents per gallon this summer over last, largely because of strong world distillate demand growth, especially in Europe and Asia.—STEO April 2008
Ethanol. Domestic ethanol production has increased from an average of 314,000 bbl/d during the summer of 2006, to 418,000 bbl/d during the summer of 2007, and is projected to average 550,000 bbl/d this summer, according to the EIA.
This summer’s domestic gasoline production is expected to be down by about 20,000 bbl/d from last summer’s average. Because of the expected 130,000 bbl/d increase in ethanol production, production of gasoline at US refineries is expected to decline by as much as 150,000 bbl/d this summer.
The increasing size of the ethanol component in the fuel pool is affecting average fuel efficiencies. The EIA, in a supplement to the STEO, noted that the increasing share of lower-Btu content ethanol is contributing to a growing divergence between volume-based and energy-content-based measures of trends in gasoline consumption.
The net energy content of ethanol is only 76,000 Btu per gallon compared to about 114,000 Btu per gallon for motor gasoline produced from crude oil refining. The increase in ethanol’s share of the total motor gasoline pool will therefore reduce average automobile fuel efficiencies. In fact, the substantial increase in the ethanol market share projected for 2008 indicates that, even though motor gasoline consumption is projected to decline by 0.1% for that year on a volumetric basis, it is expected to decline by about 0.6% on a Btu basis.