Forecast Calls for July Peak in Gas Prices

A picture of a man preparing to pump gas at a gas station

The U.S. Energy Information Administration’s latest Short Term Energy Outlook report calls for national gas prices to peak in July before falling the rest of 2021.

Regular gas retail prices averaged $3.06 a gallon in June, the first time prices averaged above $3 a gallon since October 2014. The EIA outlook calls for prices to rise to an average of $3.11 in July. From there, however, EIA forecasts prices falling to $2.93 a gallon in September, then continuing to a low of $2.76 in December.

“In 2021, as vaccination levels have increased and general economic activity has begun to recover, personal mobility and seasonal driving demand has grown sharply year-over-year,” EIA stated, “leading to increasing prices for crude oil, gasoline and diesel fuel compared with the same time last year.”

After averaging $2.78 a gallon in the first half of 2021, EIA forecasts prices to average $2.92 a gallon in the second half of 2021, and $2.85 a gallon for the full year.

“We expect that gradual reductions in U.S. refinery margins, driven partially by increased refinery output along with falling crude oil prices, will result in lower retail gasoline prices for the remainder of the year,” EIA stated.

The average price is forecast to drop to $2.74 a gallon in 2022.

Diesel fuel is projected to average $3.16 a gallon in 2021, falling to $3.09 a gallon in 2022. Prices averaged $2.55 a gallon in 2020.

“We expect that global economic activity returning to pre-pandemic levels will help drive diesel refinery margins higher during the forecast period than their multiyear lows in 2020,” EIA stated.

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