DENVER-
Uncertainty about refinery capacity in spots like Nigeria and Venezuela will put pressure on U.S. motor fuel prices this summer, federal energy officials said Tuesday.
The U.S. Energy Information Administration—the statistical arm of the Energy Department—expects average gasoline prices of $2.81 a gallon this summer, down from $2.84 last summer, although prices could vary widely in different states and from month to month. The outlook forecasts a peak in the average price at $2.87 in May.
Those prices are already showing up at the pump, though, after refinery problems and unrest abroad. EIA Administrator Guy Caruso said the forecast for the summer should still hold.
The EIA’s summer fuel outlook was influenced by projected refinery capacity, rising gasoline demand as people’s disposable income rises, slightly lower imports and lower gas inventories.
Caruso said inventories are about 7 million barrels below normal going into the summer driving season.
Part of the outlook hinges on average U.S. refinery utilization rates of 94 percent, up from 92 percent last summer.
“It’s doable. We’ve done it before,” Caruso said. “Whenever you’re stressing your system and pushing it that hard, clearly there is risk.”
If that rate can’t be maintained and imports aren’t available, gas prices would likely rise.
It would also put pressure on U.S. refineries to respond in the event of weather disturbances, like hurricanes, or geopolitical disturbances, such as unrest in Nigeria, Venezuela, Iran or Iraq.
“In the past imports have been our savior,” Caruso said.
Average gasoline consumption from April through September is about 9.5 million barrels per day, and of that, 1.1 million typically comes from imports. On the East coast, about 30 percent comes from imports.
An encouraging note is that spare capacity is ramping up closer to historic norms, Caruso said.
Longer term, Caruso said he was concerned about global infrastructure investment amid higher materials costs, the availability of skilled labor, and geopolitics placing uncertainty on the supply of crude.
Caruso spoke at the Summer Energy Outlook Conference, sponsored by the Department of Energy’s Office of Electricity Delivery and Energy Reliability and the National Conference of State Legislatures.
