Gasoline and Diesel Prices Monitor
Crude Oil and Liquid Fuels
The Brent crude oil spot price in the Energy Information Administration (EIA) forecast averages $83 per barrel (/b) in 2023 and $78/b in 2024. Although EIA expects global oil inventories will build throughout the forecast period, EIA expects that high demand for crude oil from refineries because of elevated refining margins will limit downward pressure on crude oil prices through second quarter 2023 as refiners maintain high levels of crude oil inputs to maximize distillate fuel production. Russia was a key supplier of distillate fuel to Europe, and changes in distillate trade flows as Europe reduced imports of distillate from Russia in recent months have kept distillate fuel margins well–above five–year averages. However, EIA forecasts that increasing global oil inventories will contribute to falling crude oil prices beginning in third quarter 2023.
Gasoline and Diesel Prices
U.S. regular gasoline retail prices averaged $3.97 per gallon in 2022. EIA forecasts regular gasoline retail prices to average $3.36 per gallon in 2023 and $3.11 per gallon in 2024. Typically, from February to May or June, the U.S. gasoline crack spread (the difference between the wholesale price of gasoline and the price of Brent crude oil) increases because of the shift to the more expensive, summer–grade gasoline and rising gasoline demand leading up to the summer. Over the past five years, the increase in the gasoline crack spread from February to June averaged almost 30 cents per gallon (/gal). Also because of the seasonal increase in gasoline demand from February to June, gasoline inventories have fallen by 13 million barrels on average over the past five years. From February to June this year, however, EIA expects increasing refining to offset seasonal increases in demand, generating slight gasoline inventory builds and a small decline in gasoline crack spreads. EIA forecasts that U.S. gasoline inventories will decrease by 9 million barrels in March because of postponed refinery maintenance. However, as refineries complete turnarounds, EIA expects inventories will end June with 10 million barrels more gasoline than at the end of March.
The peak average price of $4.10 per gallon for gasoline in Nebraska was reached on July 15, 2008.
U.S. on–highway diesel fuel retail prices averaged $4.99 per gallon in 2022. There is no forecast from EIA. Demand for U.S. diesel exports amid shifting trade flows and increased freight costs following responses to Russia’s full–scale invasion of Ukraine have reduced diesel inventories in the United States and driven up diesel prices globally. EIA expects U.S. distillate inventories to remain below the five–year average in 2023 but to increase slightly compared with 2022 as refinery runs increase and U.S. distillate fuel demand falls.
The peak average price of $4.77 per gallon for diesel in Nebraska was reached on July 17, 2008.
Source: The March, 2023, "Short–Term Energy Outlook" (STEO). Energy Information Administration, Washington, DC.
Because taxes and retail distribution costs are generally stable, movements in gasoline and diesel prices are driven primarily by changes in crude oil prices and wholesale margins. Crude oil prices that differ from the forecast would be reflected in the price of motor fuels. Each dollar per barrel of sustained change in crude oil prices relative to the forecast translates into approximately a 2.4 cent–per–gallon change in product prices.