Consumption. Total consumption of liquid fuels and other petroleum products averaged 19.4 million bbl/d in 2008, down nearly 1.3 million bbl/d from 2007. Based on the prospects of a continuing weak economy, consumption is projected to shrink by an additional 570,000 bbl/d in 2009, led by a 200,000-bbl/d fall in distillate fuel consumption. The assumed gradual economic recovery in 2010 is expected to contribute to a 250,000-bbl/d increase in total liquid fuels consumption. Having fallen by 320,000 bbl/d last year, motor gasoline consumption is projected to increase slightly in 2009 and then rise by a further 70,000 bbl/d in 2010, or 0.7 percent, as continuing high unemployment constrains increases in driving activity. Distillate consumption in 2010 is projected to rise by only 50,000 bbl/d, reflecting a weak recovery in industrial activity.
Production. Total domestic crude oil production averaged 4.96 million bbl/d in 2008, down from 5.06 million bbl/d in 2007. Crude oil production is projected to increase to an average of 5.20 million bbl/d in 2009 and 5.33 million bbl/d in 2010. Contributing to the increases in output are the Gulf of Mexico Thunder Horse and Tahiti platforms.
Prices. WTI crude oil prices, which averaged $99.57 per barrel in 2008, are projected to average $52 per barrel in 2009 and $58 per barrel in 2010. These prices are about $1 per barrel and $5 per barrel, respectively, below those projected in last month’s Outlook. However, a stronger-than-expected economic recovery or lower non-OPEC production (due to low oil prices, financial market constraints, or more aggressive action to cut production by OPEC countries) could lead to a faster and stronger rise in oil prices. As always, energy price forecasts are highly uncertain. Both recent experience and the sizable participation in near-term crude oil futures options contracts at strike prices that are significantly different from current futures market prices clearly demonstrate that crude oil prices can move within a wide range in a relatively short period.
EIA projects that regular-grade motor gasoline retail prices, which averaged $3.26 per gallon in 2008, will average $2.12 per gallon this year, down 4 cents per gallon from last month’s Outlook projection. Regular-grade gasoline retail prices are projected to rise to $2.30 per gallon in 2010, 12 cents lower than projected in the previous Outlook. These projections indicate that total gasoline margins, which had declined last year as a result of weakness in gasoline consumption and growth in ethanol supplies, are expected to stabilize, albeit at low levels, as consumption slowly recovers and increases in ethanol supplies moderate.
Diesel fuel retail prices, which averaged $3.80 per gallon in 2008, are projected to average $2.26 per gallon in 2009, down 4 cents per gallon from the previous Outlook. Diesel fuel retail prices are projected to average $2.48 per gallon in 2010, down 21 cents per gallon from the previous Outlook.