Rumors abound that America is headed for $5 gasoline. That ghastly number popped up in February global news as Saudi Arabia leaked word that its oil reserves weren't quite as large as they were pumped up to be.
But Tom Kloza, chief oil analyst with Oil Price Information Service, squelched that prediction, noting that Americans will see gasoline prices hit the $5 a gallon mark in the next decade – but not by 2012.
Speculation spins gas pump prices up and down. Real-time fuel prices, however, are moving upward much slower. That's the word from the U.S. Energy Department's Energy Information Administration.
EIA tracks global natural gas and petroleum reserves and predicts fuel price trends. Here's what EIA's Industry Economist Neil Gamson projected in early February for 2011 and 2012:
- Average regular-grade retail gasoline prices, with state and federal taxes averaging 49 cents a gallon, are projected to rise from $2.78 in 2010 to $3.15 per gallon in 2011 and $3.30 per gallon in 2012.
- On-highway retail diesel fuel (taxes included) will rise from the 2010 average of $2.99 to $3.43 per gallon in 2011, and $3.51 in 2012, says Falter. State and federal taxes average 52 cents a gallon.
- Residential heating oil is likely to jump from the 2010 national average of $2.97 to $3.41 per gallon in 2011 and $3.55 in 2012.
- Residential natural gas will be up only slightly from 2010, with average 2011 price at $11.29 per million cubic feet, then jump to $12.01 in 2012 as supplies begin tightening.
Best time to tank-up?
Looking at EIA's monthly price projections, gasoline prices peak in July. The best time to price gasoline may be in early spring or mid- to late-fall.
Diesel fuel prices trends don't have the same volatility. Average national on-highway retail prices tend to run highest during winter months.
Crude import situ
Crude oil is expected to average $93 a barrel in 2011, compared to $79 in 2010. For 2012, EIA forecasts $98 a barrel, due to declining global oil inventories and rising demand.
This underscores the growing need for domestic production of liquid fuels (crude oil and refined products). EIA official point out that imports dropped from 57% of total use in 2008 to 49% in 2010, due in part to the economic recession.But imports are projected to increase to 50% to 51% over the next two years. Ethanol production is expected to rise 6% in 2011 with new plants and idled plants coming on line.