Energy Dept. revises forecasts for higher oil, fuel prices

For the first time ever, the Energy Department’s Energy Information Administration, issued a forecast that says oil prices will average more than $100/barrel for 2008.

According to a revised forecast issued today in its Short-Term Energy Outlook, the EIA says West Texas Intermediate (WTI) crude oil prices, which averaged $72.32 in 2007, are projected to average $101/barrel in 2008 before declining slightly to $92.50/barrel in 2009.

The increased crude oil prices will also drive up diesel fuel, gasoline and natural gas prices, despite the fact that “U.S. consumption of liquid fuels and other petroleum is expected to decline in 2008 by about 85,000 barrels/day as a result of the economic slowdown and high petroleum prices.”

U.S. Energy Secretary Sam Bodman said on Monday U.S. gasoline prices could hit $3.50 a gallon this summer, but said he is "optimistic" that OPEC will come to the rescue of U.S. drivers but OPEC ministers said this week they don’t plan to increase supply because the high prices are not due to a lack of supply.

EIA data has national average gasoline prices currently at $3.33/gallon this week and on-highway diesel prices averaging $3.96/gallon nationally.

"I would like to think that we're not going to get to $4 (a gallon) but I don't make forecasts—whatever it is, it is," Bodman said in a Reuters report Monday.