Higher Fuel Prices, Less Fluctuation

The U.S. Energy Department’s Short Term Energy Outlook is predicting national average on-highway diesel prices will be higher this year and in 2019 than they were in 2017 and 2016, but they shoulder at least be fairly stable during this time.

Diesel is predicted to average $2.95 per gallon in 2018 and increase to $3.01 per gallon in 2019. This represents an 11.2% hike for 2018 over last year but only a 2% increase in 2019 over 2018.

The current weekly average in the U.S. for on-highway diesel is $2.95 per gallon. It is expected to hit $3 per gallon in the fourth quarter and rise to $3.09 by the end of 2019.

Regular grade gasoline is expected to average $2.57 per gallon in 2018 and $2.58 per gallon in 2019.

Driving the price of fuel higher is increased crude oil prices. Benchmark North Sea Brent crude oil spot prices averaged $64 per barrel in December, an almost $2 per barrel increase from the November average and the highest monthly average since November 2014. Brent crude oil prices averaged $54 per barrel in 2017 and are forecast to average $60 per barrel in 2018 and $61 per barrel in 2019. West Texas Intermediate crude oil spot prices are forecast to average $4 per barrel less than Brent prices in both 2018 and 2019.

The report also noted the slight increase in fuel and oil prices is expected as U.S. crude oil production is expected to keep moving higher.

U.S. crude oil production averaged an estimated 9.3 million barrels per day in 2017 and is estimated to have averaged 9.9 million barrels per day in December. U.S. crude oil production is forecast to average 10.3 million barrels per day in 2018, which would mark the highest annual average production in U.S. history, surpassing the previous record of 9.6 million barrels per day set in 1970. EIA forecasts production to increase to an average of 10.8 million barrels per day in 2019 and to surpass 11 million barrels per day in November 2019.

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