1 of 2 | The U.S. Energy Department revised its estimate for the average price for a gallon of gas. Prices at the pump, however, remain well below year-ago levels. File photo by John Angelillo/UPI | License Photo
June 6 (UPI) -- An increase in domestic consumption and the potential for elevated crude oil prices led to a near-2% upward revision in the forecast for the consumer price for gasoline, the U.S. Energy Department reported Tuesday.
The Energy Information Administration, the Energy Department's number-cruncher, published its monthly market report for June on Tuesday. EIA estimated the average retail price for a gallon of regular unleaded gasoline would be $3.39 for this year, a 1.8% increase from its forecast in May.
The upward revision was driven by demand-driven factors, but those were still behind levels from last year.
"In 2023, we forecast total U.S. petroleum products consumption will increase by less than 1%, compared with 2% year-on-year growth in 2022," EIA"s report read. "The forecast growth in 2023 is driven by gasoline and jet fuel consumption."
Meanwhile, inflation is still a strain on the U.S. economy, with the World Bank estimating growth will drop below 1% next year as the Federal Reserve continues to make borrowing more expensive in an effort to dampen prices.
But retail gasoline prices are sharply lower than year-ago levels, giving consumers a bit of relief. Travel club AAA put the national average at $3.55 for Tuesday, compared with $4.87 per gallon at this time last year.
Crude oil prices, meanwhile, could increase following a weekend decision from Saudi Arabia to voluntarily cut 1 million barrels per day from its production levels starting in July, though EIA said the pressure would be delayed.
The agency nevertheless revised its forecast for the price of Brent crude oil, the global benchmark. EIA estimates Brent will average $83.51 per barrel this year, a sharp uptick from the previous forecast for $74.47.
Crude oil prices, along with state taxes, refinery and transportation costs, account for the bulk of what consumers see at the pump. EIA is expecting some supply-side pressures during the second half of the year, but prices were in retreat on Tuesday amid concerns about the health of the global economy.
Brent was down 0.4% as of 11:45 p.m. EDT to trade at $76.38 per barrel.