Prices

Global Crude Oil Prices

EIA’s forecast of the WTI spot price is unchanged from last month’s Outlook, averaging about $100 per barrel in 2012 and $104 per barrel in 2013 (West Texas Intermediate Crude Oil Price Chart). The projected WTI price discount to other U.S. and world crude oils narrows over the forecast. The projected average refiner acquisition cost (RAC) of crude oil averages $105 per barrel and $106 per barrel in 2012 and 2013, respectively.

Energy price forecasts are highly uncertain (Market Prices and Uncertainty Report). WTI futures for April 2012 delivery during the 5-day period ending February 2, 2012 averaged $98.52 per barrel. Implied volatility averaged 30 percent, establishing the lower and upper limits of the 95-percent confidence interval for the market's expectations of monthly average WTI prices in April 2012 at $81 per barrel and $120 per barrel, respectively. Last year at this time, WTI for April 2011 delivery averaged $93 per barrel and implied volatility averaged 30 percent. The corresponding lower and upper limits of the 95-percent confidence interval were $76 per barrel and $114 per barrel.

U.S. Petroleum Product Prices

Regular-grade gasoline retail prices averaged $3.53 per gallon in 2011, which was $0.74 per gallon (27 percent) higher than the 2010 average. Higher crude oil costs ($0.60 per gallon) and refinery gasoline margins ($0.11 per gallon) accounted for most of that increase. EIA expects the regular-grade gasoline retail price to average $3.55 per gallon in 2012 as higher crude oil prices are offset by lower refinery gasoline margins (U.S. Gasoline and Crude Oil Prices Chart). Forecast regular-grade gasoline prices increase to an average $3.59 per gallon in 2013.

EIA expects that on-highway diesel fuel retail prices, which averaged $3.84 per gallon in 2011, will average $3.91 per gallon in 2012 and $3.99 per gallon in 2013 (U.S. Diesel Fuel and Crude Oil Prices Chart).

Between 1990 and 2004, annual average wholesale gasoline prices ranged from 5 cents per gallon to 11 cents per gallon above wholesale diesel prices. Beginning in 2005, wholesale gasoline prices fell below wholesale diesel fuel prices in all years except 2009, as world demand growth for diesel fuel, primarily in the emerging economies, outpaced gasoline demand growth. EIA expects the gasoline wholesale price to remain lower than diesel wholesale prices, with gasoline prices averaging 18 cents per gallon below diesel in 2012 and 22 cents per gallon lower in 2013.

U.S. Natural Gas Prices

Natural gas spot prices averaged $2.67 per MMBtu at the Henry Hub in January 2012, down $0.50 per MMBtu from the December 2011 average and the lowest average monthly price since 2002. Abundant storage levels, as well as ample supply, have contributed to the recent low prices. EIA expects the Henry Hub spot price will begin to recover after this winter’s inventory draw season ends and will average $3.35 per MMBtu in 2012 and $4.07 per MMBtu in 2013, down $0.18 per MMBtu and $0.07 per MMBtu from last month’s Outlook, respectively (U.S. Natural Gas Prices Chart).

Natural gas futures prices for April 2012 delivery (for the 5-day period ending February 2, 2012) averaged $2.71 per MMBtu, and the average implied volatility was 52 percent (Market Prices and Uncertainty Report). The lower and upper bounds for the 95-percent confidence interval for April 2012 contracts are $1.84 per MMBtu and $4.01 per MMBtu. At this time last year, the April 2011 natural gas futures contract averaged $4.39 per MMBtu and implied volatility averaged 34 percent. The corresponding lower and upper limits of the 95-percent confidence interval were $3.40 per MMBtu and $5.66 per MMBtu.

U.S. Coal Prices

Delivered coal prices to the electric power sector have increased steadily over the last 10 years and this trend continued in 2011, with an average delivered coal price of $2.40 per MMBtu (5.8 percent increase from 2010). Looking forward, several factors are exerting downward pressure on the average delivered coal price, including lower demand for coal to generate electricity due to lower natural gas prices and concerns about the effects of the implementation of pending environmental requirements. EIA forecasts the average delivered coal price to be slightly lower than the 2011 level in 2012 and 2013.

U.S. Electricity Retail Prices

Average U.S. residential electricity prices are forecast rise by 0.5 percent in 2012 before falling by a similar amount in 2013 (U.S. Residential Electricity Prices Chart). Regional price changes during 2012 vary from a decline of 2.5 percent in the Mountain region to an increase of 2.2 percent in New England.