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January 13, 2022

EIA expects gasoline and diesel prices to fall in 2022 and 2023 as demand growth slows

monthly U.S. retail fuel prices
Source: U.S. Energy Information Administration, Short-Term Energy Outlook, January 2021

In our latest Short-Term Energy Outlook, we expect regular gasoline retail prices to average $3.06/gal in 2022, up from $3.00/gal in 2021, and then down to $2.80/gal in 2023. We expect on-highway diesel prices to increase to average $3.33/gal in 2022 before decreasing to $3.27/gal in 2023. In our forecast, annual average diesel demand reaches 2019 levels in the United States in 2022.

We expect that slower demand growth and increasing crude oil production through 2022 and 2023 will contribute to lower crude oil and petroleum product prices. Crude oil prices are the largest driver of retail gasoline and diesel fuel prices.

In 2022, we expect recently reduced retail gasoline prices to continue to decline as demand growth slows. We estimate that annual average motor gasoline consumption, which fell by an estimated 1.2 million b/d in 2020, increased by 0.7 million b/d in 2021. We expect an additional increase of 0.3 million b/d in 2022 and before a minor increase of less than 0.1 million b/d in 2023.

We expect U.S. gasoline consumption to remain below 2019 levels (9.3 million b/d) on an annual basis through the STEO forecast. However, we forecast that driving trends will surpass pre-pandemic levels in 2022 and 2023, but they will be offset by continued increases in vehicle fleet fuel economy that will limit U.S. growth in gasoline demand.

monthly U.S. motor gasoline and distillate fuel oil consumption
Source: U.S. Energy Information Administration, Short-Term Energy Outlook, January 2021

Distillate fuel oil consumption (much of which is consumed as diesel) decreased from 4.1 million b/d in 2019 to 3.8 million b/d in 2020. In 2021, we estimate consumption increased to 3.9 million b/d. We expect distillate demand will return to just below 2019 levels in 2022.

Additional information on our forecasts for petroleum consumption, production, inventories, and prices is available in the Short-Term Energy Outlook.

Principal contributor: Kevin Hack