Federal government report expects demand for vehicle fuel will be flat for 2016 and keep gasoline prices low. Photo by Pattie Steib/Shutterstock
WASHINGTON, Sept. 17 (UPI) -- Expectations that, despite historic lows for retail gasoline prices, demand next year should be flat and keep the price at the pump lower, a U.S. report said.
Motor club AAA reports a national average retail price for a gallon of regular unleaded gasoline at $2.30 per gallon, about 7 cents, or 3 percent, lower than last week and 37 cents, or roughly 14 percent, lower than one month ago.
Weak global demand for oil and a slow growth in the economy has resulted in low crude oil prices, down more than half from last year. A report from the federal Energy Information Administration finds U.S. gasoline consumption is expected to increase 2.3 percent on the back of a strong labor market and lower gasoline prices.
"However, gasoline consumption is forecast to remain flat in 2016, as a long-term trend toward vehicles that are more fuel-efficient offsets the effects of other factors," the report said.
By 2016, the average fuel efficiency for cars and light trucks will be the equivalent of 35.5 miles per gallon. The White House in August mandated that, by 2025, fuel efficiency will be the equivalent of 54.5 mpg.
Efficiency, slowing demand in the waning months of the year and a refinery switch to a cheaper blend of gasoline should keep prices lower for the rest of the year. EIA expects an average retail price of around $2.11 per gallon for the fourth quarter of the year.
"The U.S. regular gasoline retail price, which averaged $3.36 per gallon in 2014, is projected to average $2.41 per gallon in 2015 and $2.38 per gallon in 2016," EIA said.
The 2015 forecast is unchanged from previous EIA forecasts, though the 2016 price is lower by 2 cents.
Summer refinery outages in the Midwest and West Coast skewed the national average price for gas upward, which EIA said added some volatility to the retail market. The national average in August was $2.64 per gallon, though some markets in regions impacted by the refinery outages saw prices pass the $3 per gallon mark.