More: Read the Energy Information Administration's full report.
A June 4 announcement that OPEC+ plans to extend cuts in crude oil production through next year has the federal government predicting upward pressure on oil and gasoline prices.
The U.S. Energy Information Administration also expects global liquid fuel consumption to rise between 1% and 2% over last year's levels, according to the Agency’s June 6 Short-Term Energy Outlook.
The EIA expects global oil inventories to fall, with the Brent crude oil spot price averaging $79 per barrel in the second half of 2023 and $84 in 2024. The Brent spot price on Tuesday was $75.38.
“Overall, we expect U.S. liquid fuels consumption to increase in both 2023 and 2024, driven by factors mostly unrelated to forecasts for economic growth,” the report said. “Consumption growth in 2023 is led by gasoline and jet fuel, which continues to increase from a pandemic-related decline in demand. Propane and ethane consumption are the main drivers of growth in 2024.”
The EIA expects natural gas prices to rise in the summer as production declines slightly and air condition demand increases the generation of electricity from gas. “The drop in production reflects less natural gas-directed drilling because of a more than 75% decline in the Henry Hub natural gas spot price compared with its recent peak in August 2022.”
The agency said solar power has been the leading source of new electric generating capacity domestically this year, and solar generation is forecast to be 24% higher this summer than in summer 2022.
“We expect wholesale electricity prices in the Eastern half of the country to average about 50% lower in 2023 as a result of lower natural gas prices,” the forecast said. “The Northwest, Southwest, and California regions could experience temporary spikes in wholesale power prices this summer, due to a likelihood of limited power supply during peak demand hours.”