Record prices expected through 2023

June 8, 2022

Land Line Staff


In its most recent short-term energy outlook, the Energy Information Administration predicted record production of crude oil in 2023.

The June EIA outlook calls for record prices over that same period.

“We continue to see historically high energy prices as a result of the economic recovery and the repercussions of Russia’s full-scale invasion of Ukraine,” EIA Administrator Joe DeCarolis said. “Although we expect the current upward pressure on energy prices to lessen, high energy prices will likely remain prevalent in the United States this year and next.”

Among those record-breaking costs, diesel, which averaged $5.57 per gallon in May, is expected to drop to $4.78 per gallon in the third quarter of 2022.

The energy outlook predicts the drop anticipating diesel wholesale margins will fall from $1.53 per gallon to $1.07 per gallon during that period.

U.S. refineries

Refinery utilization is forecasted to average 94% in the third quarter of this year. It is a direct result of high wholesale product margins, says EIA.

This would be at or near the highest level in the past five years.

Yet, operable refinery capacity is currently 900,000 barrels per day less than at the end of 2019.

As a result, total refinery output of products is not expected to match levels of refinery utilization.

Wholesale margins are forecasted to drop from record levels based upon expected refinery utilization.

Global expectations

Low oil inventories as well as existing and potential sanctions imposed on Russia continue to increase potential oil volatility, according to the outlook.

In May, the Brent crude oil spot price averaged $113 per barrel. EIA does expect that average to drop to $108 per barrel for the second half of 2022.

Anticipated production of Russia’s liquid fuels is expected to decline from 11.3 million barrels per day in the first quarter of 2022 to 9.3 million barrels per day by the end of 2023.

Lastly, EIA expects OPEC crude oil production to average 29.2 million barrels per day in the second half of this year after OPEC+ announced adjustments of production targets for July and August during its June 2 meeting.

The full report can be found here. LL