U.S. gasoline consumption is set to climb to a record this summer as the lowest pump prices in more than a decade encourage Americans to take to the roads.
Demand, which typically peaks between the Memorial Day holiday in late May and Labor Day in early September, will average a record 9.5 million barrels during the second and third quarters, up from 9.48 million forecast in May, the Energy Information Administration said in its monthly Short-Term Energy Outlook released Tuesday. The average retail price for regular-grade gasoline this summer is forecast at $2.27 per gallon, more than the $2.21 estimated in May but down from $2.63 during the 2015 summer driving season.
"Even with higher crude oil prices passed on to consumers at the pump, summer retail gasoline prices are still expected to be the lowest in 12 years," EIA Administrator Adam Sieminski said in an e-mailed statement. "Despite the recent rise in gasoline prices, summer gasoline demand is forecast to reach a record 9.5 million barrels per day."
While crude prices in New York have jumped 90 percent from a 12-year low earlier this year as traders estimate the market is coming into balance, the commodity is still worth less than half its peak in mid-2014. The EIA raised its crude price forecasts as falling U.S. output and unplanned disruptions elsewhere limit supply while demand grows.
"Low oil prices continue to cut into domestic oil production, with U.S. monthly oil output not expected to start steadily increasing until the end of 2017,” Sieminski said. "The decline in U.S. May oil production is expected to be the largest drop in monthly output since Hurricane Ike knocked out a big chunk of offshore oil production in September 2008."
U.S. production is expected to drop from 9.43 million barrels a day in 2015 to 8.6 million this year and 8.19 million in 2017, the agency said. U.S. production estimates were unchanged from last month’s report.
West Texas Intermediate crude, the U.S. benchmark, will average $42.83 a barrel in 2016 versus the May projection of $40.32, according to the report. Prices will average $51.82 next year, up from the previous forecast of $50.65. WTI touched $26.05 a barrel on Feb. 11, the lowest since 2003, and is now hovering around $50.
Brent crude, the benchmark for more than half the world’s oil, is projected to average $43.03 this year, up from the prior estimate of $40.52. Prices will average $51.82 in 2017, up from the May estimate of $50.65, the agency said.