U.S. retail gasoline prices should drop below the July average by 2013 amid depressed consumer demand and continuing declines in crude oil prices.
U.S. lawmakers were in panic mode when the average price of gasoline hovered at around $4 per gallon in April. While relatively low compared with European markets, U.S. consumer sentiment historically turns negative when retail gasoline prices pass the $4 per gallon threshold. By next year, however, it’s likely the prices at the pump will be below the current average of $3.41 per gallon, the U.S. Energy Department said.
In early January, some analysts had predicted retail gasoline prices would hit the $5 per gallon mark in the United States. Prices continued a steady climb toward $4 per gallon by April, causing some lawmakers to consider the possibility of tapping into strategic petroleum reserves to allay consumer concerns. By February, a former chief executive at Shell Oil warned there was a “better than 50 percent chance” gasoline prices would continue their march above $4 per gallon.
The U.S. Energy Department, in its short-term monthly outlook, projected that world oil demand would peak for the year during the third quarter of 2012. The department’s Energy Information Administration attributed the expected seasonal peak to the U.S. summer driving season and a surge in electricity demand for countries in the Middle East. By then, the EIA said, oil consumption should exceed production by around 700,000 barrels per day. Nevertheless, the administration said the impact would be far less than in previous years. Last year, third-quarter consumption outpaced oil supplies by 1.8 million bpd.