� EIA : GASOLINE , DIESEL PRICES TO RISE AS ECONOMY RECOVERS
National average motor gasoline and diesel prices in 2020 were the lowest since 2016 : $ 2.17 per 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 .
EIA forecasts rising demand for gasoline and diesel in 2021 and 2022 . EIA expects annual average motor gasoline consumption , which fell by an estimated 13 % in 2020 , to remain lower than 2019 levels through 2022 . EIA forecasts light-duty vehicle miles traveled will increase as both economic activity and employment increase in 2021 and 2022 . Long-term trends in improving vehicle fleet fuel economy will continue to put downward pressure on U . S . gasoline demand .
For distillate fuel oil demand ( much of which is consumed as diesel ), EIA expects 2022 consumption to be nearly equal to 2019 levels . Annual distillate fuel oil consumption fell by an estimated 8 % in 2020 .
EIA forecasts that crude oil prices will remain lower than 2019 levels through 2022 , contributing to lower retail transportation fuel prices compared with the 2019 average . Because a barrel contains 42 gallons , each dollar-per-barrel change in the price of Brent crude oil tends to result in a 2.4-cents-per-gallon change in the price of petroleum fuels ( all else remaining equal ).
Additional information on EIA ’ s forecasts for petroleum consumption , production , inventories , and prices is available in the Short-Term Energy Outlook . Principal contributor : Kevin Hack ( See Figure 1 )
� CRUDE PRICES TO AVERAGE NEAR $ 50 PER BARREL THROUGH 2022
In its January Short-Term Energy Outlook ( STEO ), the U . S . Energy Information Administration ( EIA ) expects global demand for petroleum liquids will be greater than global supply in 2021 , especially during the first quarter , leading to inventory draws . As a result , EIA expects the price of Brent crude oil to increase from its December 2020 average of $ 50 per barrel ( b ) to an average of $ 56 / b in the first quarter of 2021 . The Brent price is then expected to average between $ 51 / b and $ 54 / b on a quarterly basis through 2022 .
EIA expects that growth in crude oil production from members of the Organization of the Petroleum Exporting Countries ( OPEC ) and partner countries ( OPEC +) will be limited because of a multilateral agreement to limit production . Saudi Arabia announced that it would voluntarily cut production by an additional 1.0 million b / d during
February and March . Even with this cut , EIA expects OPEC to produce more oil than it did last year , forecasting that crude oil production from OPEC will average 27.2 million b / d in 2021 , up from an estimated 25.6 million b / d in 2020 .
EIA forecasts that U . S . crude oil production in the Lower 48 states — excluding the Gulf of Mexico — will decline in the first quarter of 2021 before increasing through the end of 2022 . In 2021 , EIA expects crude oil production in this region will average 8.9 million b / d and total U . S . crude oil production will average 11.1 million b / d , which is less than 2020 production .
EIA expects that responses to the recent rise in COVID-19 cases will continue to limit global oil demand in the first half of 2021 . Based on global macroeconomic forecasts from Oxford Economics , however , EIA forecasts that global gross domestic product will grow by 5.4 % in 2021 and by 4.3 % in 2022 , leading to energy consumption growth . EIA forecasts that global consumption of liquid fuels will average 97.8 million barrels per day ( b / d ) in 2021 and 101.1 million b / d in 2022 , only slightly less than the 2019 average of 101.2 million b / d .
EIA expects global inventory draws will contribute to forecast rising crude oil prices in the first quarter of 2021 . Despite rising forecast crude oil prices in early 2021 , EIA expects upward price pressure will be limited through the forecast period because of high global oil inventory , surplus crude oil production capacity , and stock draws decreasing after the first quarter of 2021 . EIA forecasts Brent crude oil prices will average $ 53 / b in both 2021 and 2022 . Principal contributor : Matt French ( See Figure 2 )
� FOSSIL FUEL PRODUCTION EXPECTED TO INCREASE THROUGH 2022
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 .
EIA ’ s surveys measure fossil fuel production in physical units , such as cubic feet for natural gas , barrels for crude oil , and short tons for coal . In this article , energy production is expressed in heat content units to allow comparisons across fuel types . On a heat-content basis , dry natural gas accounted for the largest share of fossil fuel production in 2020 , at 46 %. Crude oil accounted for 31 %, coal for 14 %, and NGPLs for 9 %.
From the mid-1980s through 2010 , coal was the leading source of U . S . fossil fuel production , but coal production has since been surpassed by dry natural gas ( in 2011 ) and by crude oil ( in 2015 ). In 2020 , the United States produced twice as much energy from crude oil ( 24 quadrillion Btu ) than coal ( 11 quadrillion Btu ) and three times as much energy from natural gas ( 35 quadrillion Btu ).
10 FEBRUARY 2021 | FUEL OIL NEWS | www . fueloilnews . com