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

Posted By Elana Schor On April 8, 2010 @ 9:30 am In Economics,Energy,Gas Prices,Streetsblog Capitol Hill | 6 Comments

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).

gas_tax.jpg(Photo: Pop and Politics [1])
The EIA's latest short-term fuels outlook [2] 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 [3] 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 [4] 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 [5] 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.”


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URL to article: http://usa.streetsblog.org/2010/04/08/federal-energy-forecast-gas-nearing-3gallon-fuel-consumption-up/

URLs in this post:

[1] Pop and Politics: http://www.popandpolitics.com/wp-content/uploads/2008/05/gas_tax.jpg

[2] fuels outlook: http://www.eia.doe.gov/emeu/steo/pub/contents.html

[3] still betting: http://www.consumeraffairs.com/news04/2010/04/gas_prices313.html

[4] the downturn: http://usa.streetsblog.org/2010/01/04/economic-downturn-hits-transit-ridership-but-not-in-these-cities/

[5] told reporters: http://thehill.com/blogs/e2-wire/677-e2-wire/86303-gibbs-predicts-clamoring-for-energy-bill-as-gas-prices-rise

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