Source: U.S. Energy Information Administration, Short-Term Energy Outlook (STEO)
In our Summer Fuels Outlook, a supplement to our April 2022 Short-Term Energy Outlook, we expect retail gasoline prices to average $3.84 per gallon (gal) this summer driving season, April through September, compared with last summer’s average price of $3.06/gal. After adjusting for inflation, this summer’s forecast national average price would mark the highest retail gasoline and diesel prices since 2014.
We expect the ongoing effects of the COVID-19 pandemic will have a smaller effect on gasoline and diesel consumption in the United States during the 2022 summer season compared with the past two summers. U.S. gasoline and diesel consumption continue to remain below their 2019 averages.
We expect higher fuel prices this summer as a result of higher crude oil prices. Crude oil prices have generally risen since the start of the year partly as a result of geopolitical developments, particularly Russia’s war against Ukraine.
We expect U.S. economic activity to increase through the summer, resulting in more demand for petroleum fuels. Greater demand will contribute to higher crude oil prices. We expect Brent crude oil will average $106 per barrel (b) this summer, which would be $35/b higher than last summer.
Recently, increased volatility of crude oil prices, which account for around 60% of total retail gasoline prices, indicates our crude oil price forecast could change, depending on several factors that remain highly uncertain. Notably, our outlook takes into account all sanctions on Russia announced as of April 7, but the range of possible outcomes for resulting oil production in Russia is wide.
Gasoline and diesel prices have already declined since their peaks in March, when the U.S. average gasoline price surpassed $4.00/gal and the average diesel price surpassed $5.00/gal. We expect these prices to continue falling throughout the summer.
As U.S. refineries increase gasoline and distillate production, we expect this increased production to gradually place downward pressure on wholesale gasoline margins and retail prices during the summer. As a result, we forecast the average U.S. retail gasoline price will fall to $3.75/gal in July and to $3.68/gal in September. Similarly, we expect the average U.S. retail diesel price to fall to $4.44/gal in July and $4.20/gal in September.