Federal Energy Forecast: Gas Nearing $3/Gallon, Fuel Consumption Up

Average gas prices are expected to hit $2.92 during this summer’s peak driving season, with fossil-fuel consumption rising overall as the economy begins to recover from a recession that limited U.S. emissions growth, according to a forecast released this week by the federal Energy Information Administration (EIA).

The EIA’s latest short-term fuels outlook stopped short of predicting the return of the $4-per-gallon gas prices seen in the summer of 2008, which gave new political momentum for alternative energy expansion — though some financial analysts are still betting that fuel costs will rise significantly this year.

The EIA also projected that total emissions from Americans’ fossil-fuel use would start to rise after falling by 6.6 percent last year, with a 2.1 percent increase predicted in 2010 and a 1.1 percent increase in 2011. U.S. emissions first began falling in 2008 as the global financial crisis took hold; conversely, the EIA said a future return to rising emissions would be driven by "economic growth."

But what future growth won’t do, according to the federal government’s energy crystal ball, is power a sizable new uptick in summer gasoline use. From the EIA report:

During this summer season, projected motor gasoline consumption increases by 0.5 percent over last summer, substantially lower than the 0.8 percent growth rate recorded last summer. Gasoline consumption last summer was stimulated by both the beginning of economic recovery and a $1.37 per gallon decline in gasoline prices from the previous year.

Another reason for the increase in fuel consumption last summer, per the EIA, was the downturn in transit ridership — suggesting that local service cuts or fare hikes may have helped push travelers into their cars.

If the EIA’s prediction holds true, Democrats may not be able to make as much political hay of high fuel prices as they attempt to pass a climate change bill during the summer. White House press secretary Robert Gibbs told reporters last month that "my guess is there will be a clamoring for an energy bill when gas
prices go up, as they normally do, as we get closer to more driving as
we get closer to the summer.”

  • I really think the price of gasoline is going to rise significantly over the next couple years. We’re coming out of the recession, the global growth in car ownership continues, and if we have any degree of policy sanity on road maintenance and climate change (the solutions to both of which require INCREASED fuel taxes) costs will rise from that as well.

    The moral of the story is we should all be preparing for a future in which gasoline is expensive! It’s necessary for so many reasons. The sooner America accepts that, the better.

    What a “nightmare”: a future where people have an incentive to conserve energy and alternative fuels have a stronger market position.

  • hello,
    Gasoline price in Norway is at the moment 6-7 Dollars pr gallon. and going up.
    By the way, want to devolop the traffic system for the future? where road pricing and petrol pricing is less important. Please see: http://trafikklogistikk.com

    reagrds
    Knut Bøe
    “TrafficLogistics”

  • J:Lai

    A variable tax which puts a floor on the price of gasoline would provide a dis-incentive to drive, raise revenue, and additionally reduce volatility in gas prices that makes long term planning for alternative fuels or means of transportation so difficult.

  • Nick J

    Why was a link to EIA and the Short-Term Energy Outlook not included in this post?

    http://www.eia.doe.gov/emeu/steo/pub/contents.html

  • zach

    How much would gas have to cost to reduce congestion so that Americans don’t have to sit frustrated in bumper-to-bumper traffic on the way to work?

    We can convince the majority that gas price increases are as good as they are bad.

  • Nick J – The link was mistakenly omitted and has been re-added. Thanks!

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