Prices

• We forecast the spot price of Brent crude oil will average $105 per barrel (b) in 2022 and $95/b in 2023.

• The U.S. retail price for regular grade gasoline averaged $4.56 per gallon (gal) in July, and the average retail diesel price was $5.49/gal. We expect retail gasoline prices to average $4.29/gal in the third quarter of 2022 (3Q22) and fall to an average of $3.78/gal in 4Q22. Retail diesel prices in our forecast average $5.02/gal in 3Q22 and $4.39/gal in 4Q22.

• U.S. refineries average 93% utilization in 3Q22 in our forecast, as a result of high wholesale product margins. Elevated prices for gasoline and diesel reflect refining margins for those products that are at or near record highs amid low inventory levels.

• In July, the Henry Hub spot price averaged $7.28 per million British thermal units (MMBtu), down from $7.70/MMBtu in June and $8.14/MMBtu in May. Average natural gas prices fell over the last two months primarily because of additional supply in the domestic market following the shutdown of the Freeport LNG export terminal on June 8. However, prices increased by almost 50%, from $5.73/MMBtu on July 1 to $8.37/MMBtu on July 29, because of continued high demand for natural gas from the electric power sector. We expect the Henry Hub price to average $7.54/MMBtu in the second half of 2022 and then fall to an average of $5.10/MMBtu in 2023 amid rising natural gas production.

• We forecast the U.S. residential electricity price will average 14.6 cents per kilowatthour (kWh) in 2022, up 6.1% from 2021. Higher retail electricity prices largely reflect an increase in wholesale power prices driven by rising natural gas prices. Annual average wholesale prices for 2022 range from an average of $62 per megawatthour (MWh) in Florida to $95/MWh in the ISO New England and New York ISO markets.