EIA Chief Says Oil Prices Will Fall
Wednesday November 14
By Dan Caterinicchia, AP Business Writer
EIA Chief Says Gasoline Prices Will Continue to Rise, but Oil Prices Will Fall in 2008
WASHINGTON (AP) -- Oil prices are likely to fall at least another $10 a barrel by next year, a top Energy Department official said Wednesday, but he warned gasoline and heating oil prices will continue to rise in coming weeks.
Guy Caruso, chief of the Energy Department's statistical division, the Energy Information Administration, said prices are expected to retreat to around $80 per barrel next year based on assumptions about new supplies and limited growth in demand.
Since peaking at $98.62 a barrel last week, oil prices have retreated by about $5.
Still, the possibility of supply disruptions in Nigeria, Russia and beyond -- as well as the heavy speculative trading of oil futures on Wall Street -- is bound to keep prices volatile, Caruso said.
Light, sweet crude for December delivery rose $2.55 to $93.72 a barrel on the New York Mercantile Exchange on Wednesday. A day earlier, they fell $3.45.
At the pump, though, Caruso said prices appear headed in one direction over the short-term: up. Caruso predicted gasoline prices, now averaging $3.11 a gallon nationwide, will rise another 10 cents a gallon by December. Another 15 cents a gallon jump would surpass May's all-time record of $3.23 a gallon.
Gas prices traditionally fall in the winter months as demand ebbs from summer highs, but oil prices flirting with record highs and low inventories have eliminated that seasonal trend this year.
Heating oil customers also will see a continued rise in costs this winter. The retail cost of a gallon of heating oil is expected to rise by about 25 percent from a year ago to an average of $3.05 a gallon, Caruso said during a press conference sponsored by the U.S. Energy Association.
Heating oil is used by 7 percent of American households, mostly in the Northeast, and is derived from crude, whose price has climbed 34 percent from a year ago, trading Wednesday near $94 per barrel.
Natural gas at the residential level, which is used by 58 percent of households, is forecast to increase in price by about 11 percent. For the 5 percent of American homes that use propane, winter heating costs are expected to be about 20 percent higher than last year, Caruso said.
