EIA outlook forecasts rising diesel costs

November 9, 2022

SJ Munoz

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The Energy Information Administration’s most recent short-term energy outlook pointed to inventories in predicting continued higher prices for diesel through early 2023.

EIA’s outlook, released Nov. 8, forecasts diesel prices above $5 per gallon for the rest of 2022 as U.S. inventories finished October at their lowest levels since October 1951.

The EIA table below illustrates the change in forecasting the annual average diesel price since 2021. The current short-term energy outlook forecast was completed Nov. 3. The previous forecast was completed Oct. 6.

2021 2022 2023
Diesel retail price (dollars per gallon) $3.29 $5.09 $4.65
Previous $3.29 $4.97 $4.29
Percentage change 0.0% 2.5% 8.4%

Data source: U.S. Energy Information Administration, Short-Term Energy Outlook

“The distillate fuels in storage aren’t the only source of diesel we have to keep trucks and trains moving, but lower-than-average storage levels will contribute to higher costs for diesel and for heating fuels through the winter,” said Joe DeCarolis, EIA administrator.

Additionally, EIA anticipates import bans will be a bigger factor than the OPEC+ decision to cut production.

“Russia faces significant and expanding sanctions following its invasion of Ukraine, and we expect those sanctions will have far more impact on Russia’s energy production than the planned OPEC+ production cuts,” DeCarolis said.

EIA expects that OPEC crude oil production will drop in November and December, but will average 28.9 million barrels per day in 2023, according to the short-term outlook. That number would be an increase of 300,000 barrels per day from 2022.

However, growth of non-OPEC oil production keeps the Brent crude oil price annual average lower in 2023 than in 2022, according to EIA’s outlook. EIA does anticipate that price will begin rising by the second half of 2023.

Overview
2020 2021 2022 2023
Brent crude oil
(dollars per barrel)
41.69 70.89 102.13 95.33
U.S. crude oil production
(million barrels per day)
11.32 11.25 11.83 12.31

Data source: U.S. Energy Information Administration, Short-Term Energy Outlook

The full short-term energy outlook can be found here. LL