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Oil and fuel forecasters forced to change their tune

Oil and fuel-price forecasters are scurrying to revise their projections for the year as prices continue to soar beyond expectations. Although down a couple of bucks so far this week, oil prices are still higher than projected and so are prices for diesel and gas.

Tom Kloza with the Oil Price Information Service is still holding onto the belief that overall, the prices for oil, diesel and gas will retreat later this year, but predictions about when the price will peak will be challenging given the Middle East and Libyan conflicts, consumer demand, U.S. exports and market speculation.

“My sense is that diesel prices are going to be higher in the first half of 2011, but lower in the second half,” Kloza told Land Line on Monday, April 11.

“We’ll move a little bit higher here, but I don’t think we’re going to move to 2008 numbers.”

Kloza said the markets for oil, grain and stocks are “overcooked” right now but prices will ease some.

“The way we started the second quarter are not going to be the way we end it,” he said.

Still, with gas already above Kloza’s previous forecast of $3.75 a gallon, and diesel averaging higher than $4, the forecasters are retooling their projections for the rest of the year.

Where do we stand this week? According to the tracking site, ProMiles, the national average for diesel was at $4.094 per gallon on Monday. That’s up 2 cents overnight and up nearly a dime from a week ago.

Just 11 states were averaging below $4 for diesel on Monday. California was at $4.417, topping Connecticut and Washington state by 4 and 5 cents a gallon, respectively. Even with taxes not included in the equation, California was still averaging above $4 a gallon.

The U.S. Energy Information Administration is scheduled to release its next Short-Term Energy Outlook on Tuesday, April 12, and is likely to contain revisions to last month’s forecasted prices.

For the week ending Monday, EIA reported diesel was averaging $4.078, up about a dime from the week before.

Weekly on-highway diesel prices and activity by region as reported by the EIA:

U.S. – $4.078, up 10.2 cents
East Coast – $4.082, up 10 cents
New England – $4.154, up 4.5 cents
Central Atlantic – $4.204, up 11.2 cents
Lower Atlantic – $4.024, up 10.1 cents
Midwest – $4.040, up 10.8 cents
Gulf Coast – $4.001, up 9.6 cents
Rocky Mountain – $4.097, up 8 cents
West Coast – $4.308, up 9.9 cents
California – $4.397, up 7.4 cents

Oil prices on the New York Mercantile Exchange have eased a bit since Friday, April 8, but were still above $110 a barrel mid-day on Monday. December futures for light sweet crude were higher at $112.50 a barrel.

www.LandLineMag.com