Energy Department projects sharply lower fuel prices this winter; $1.35 gasoline
Thursday, October 4th 2001, 12:00 am
By: News On 6
WASHINGTON (AP) _ Energy prices across the board, from gasoline to heating fuels, are expected to be sharply lower this winter, the Energy Department said Thursday.
That's in sharp contrast to a year ago, when short supplies and spikes in demand saw prices soar.
The Energy Information Administration's winter fuels report cited low oil prices, rising inventories and sagging energy demand because of the declining economy as reasons behind the low prices expected this winter.
``Under normal weather assumptions, relatively weak demand and generally ample fuel inventories portend sharp reductions in fuel prices compared to last winter's,'' said the report.
Gasoline prices, which normally dip in the winter months, were projected to decline on a national average to below $1.35 a gallon. The average price at gas pumps has tumbled 11 cents a gallon nationally in the three weeks since the Sept. 11 terrorist attacks, the agency said.
The average price of regular gasoline nationwide was $1.41 a gallon this week, about 11 cents cheaper than at the same time a year ago, according to the EIA.
The most dramatic reversal will be seen in this winter's heating fuel costs _ natural gas, heating oil and propane _ with prices dramatically lower, said the report.
A typical household using natural gas is expected to spend 34 percent less this winter for heating; a home using heating oil, 17 percent less; and one using propane, 23 percent less, said the report.
That assumes a normal winter and somewhat lower demand than last year when usage was higher than expected during the early winter months.
The prices reflect a $7.60-a-barrel decline in crude oil costs, compared to last winter; the collapse of the natural gas market with prices a third of what they were last year at this time; and expected generous supplies of heating oil in part because refineries are shifting away from producing jet fuel.
The report cited a striking swing in natural gas prices, which peaked at $10 per 1,000 cubic feet on the wholesale market last winter. Since then, prices have tumbled to 1999 levels, below $2 per 1,000 cubic feet.
The EIA predicts natural gas prices at the wellhead to average $2.10 per 1,000 cubic feet this winter, compared to $6.20 last winter. Industrial demand for natural gas fell by 18 percent during the first half of the year and is expected to continue because of the declining economy, the report said.
Distillate stocks _ heating oil, diesel and jet fuel _ were 8 percent higher at the end of September than at the same time a year ago and are expected to continue to increase in the coming months, the report said.
With airlines cutting back flights in the aftermath of the terrorist attacks, demand for jet fuel has dropped by 20 percent, the report said. As a result refiners are expected to push out more heating oil, adding to supplies and pressuring prices downward.