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EIA: Gasoline and Diesel Prices Expected to Rise as U.S. Economy Recovers

National average motor gasoline and diesel prices in 2020 were the lowest since 2016: $2.17/gallon (gal) for gasoline and $2.55/gal for diesel, according to the U.S. Energy Information Administration’s (EIA) Gasoline and Diesel Fuel Update. EIA expects that economic recovery and greater demand for transportation fuels will lead to higher prices for gasoline and diesel in 2021 and 2022. In its latest Short-Term Energy Outlook, EIA expects regular gasoline retail prices to average $2.42/gal in 2021 and $2.43/gal in 2022 and on-highway diesel prices to average $2.71/gal in 2021 and $2.74/gal in 2022.

Demand for transportation fuels fell in 2020 primarily because of responses to the COVID-19 pandemic. As the vaccines for COVID-19 become more widely distributed in 2021, EIA expects the effects of the pandemic on liquids fuels consumption to moderate.


Biden Temporarily Suspends Oil, Gas Leases on Federal Property

“The Biden administration announced Thursday a 60-day suspension of new oil and gas leasing and drilling permits for U.S. lands and waters as officials moved quickly to reverse Trump administration policies on energy and the environment,” The Associated Press reports.

“The order did not ban new drilling outright. It includes an exception giving a small number of senior Interior officials…authority to approve actions that otherwise would be suspended.”

Fossil Fuel Production to Increase but Remain Below 2019 Peak

In 2020, fossil fuel production in the United States declined by an estimated 6% from the 2019 record high of 81.3 quadrillion British thermal units (Btu). Based on forecasts in the U.S. Energy Information Administration’s (EIA) January 2021 Short-Term Energy Outlook (STEO), EIA expects total production of fossil fuels in the United States to remain flat in 2021 as increased coal production offsets declines in natural gas production. EIA expects production of all fossil fuels—crude oil, coal, dry natural gas, and natural gas plant liquids (NGPL)—to increase in 2022, but forecast fossil fuel production will remain lower than the 2019 peak.

OPEC: U.S. Shale Output to Pick Up in 2021

In its monthly report, OPEC forecasts that “U.S. total oil supply will rise by 370,000 barrels per day (bpd) in 2021 to 17.99 million bpd.”

Reuters reports that “OPEC left its forecast for world demand unchanged, saying oil use will rise by 5.90 million bpd this year to 95.91 million bpd, following a record 9.75 million bpd contraction last year due to the pandemic.”

U.S. Oil and Natural Gas Production to Fall in 2021

In its January 2020 Short-Term Energy Outlook, the U.S. Energy Information Administration (EIA) forecasts that annual U.S. crude oil production will average 11.1 million b/d in 2021, down 0.2 million b/d from 2020 as result of a decline in drilling activity related to low oil prices. A production decline in 2021 would mark the second consecutive year of production declines. Responses to the COVID-19 pandemic led to supply and demand disruptions. EIA expects crude oil production to increase in 2022 by 0.4 million b/d because of increased drilling as prices remain at or near $50 per barrel.

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