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Economic Forecasts

Prices at the Pump to Stay Low

Kiplinger's latest forecast on the direction of energy prices


GDP 2.1% growth in ’17, following 1.6% in ’16 More »
Jobs Hiring pace should slow to 175K/month in '17 More »
Interest rates 10-year T-notes at 2.4% by end '17 More »
Inflation 1.6% in '17, down from 2.1% in '16 More »
Business spending Rising 3%-4% in ’17, after flat ’16 More »
Energy Crude trading from $40 to $45 per barrel in September More »
Housing 6% price growth by end of '17 More »
Retail sales Growing 3.5% in '17 (excluding gas) More »
Trade deficit Widening 4% in '17, after nearly flat '16 More »

Cheaper crude oil is starting to benefit drivers at the gas station. The national average price of regular unleaded gasoline slipped four cents from a week ago, to $2.29 per gallon. And a price rebound seems unlikely for now. We look for the national average price to hover around $2.30 per gallon. Diesel, now averaging $2.47 per gallon, figures to remain between $2.45 and $2.50 this summer.

Market concern about excess supply has crude oil prices trending lower. Benchmark West Texas Intermediate was recently trading at $44.58 per barrel: Off about $1.50 from a week ago. The amount of crude oil and refined fuels held in storage in the United States remains stubbornly high, and U.S. oil production continues to rise. Given the supply glut, markets seem skeptical that OPEC’s low output quota will be enough to bring storage amounts down to more-normal levels anytime soon.

Via E-mail: Energy Alerts from Kiplinger

We don’t see any significant rebound ahead for oil prices. Energy companies keep finding ways to coax more crude out of the ground in Texas and other oil-rich states, even as OPEC throttles back its production. Given the likelihood of markets remaining oversupplied, we expect WTI to trade between $40 and $45 per barrel in September.


Natural gas prices are also taking a hit, with the benchmark gas futures contract trading recently at $2.90 per million British thermal units (MMBtu), off more than a dime from a week ago. Summer weather that is warm but not scorching across much of the country means gas demand should remain fairly low. And U.S. gas output is starting to perk up, adding supply at a time when it’s not needed. A sustained heat wave would lead to more gas consumption as gas-fired power plants rev up to keep air conditioners running. But barring that, we see gas prices holding near $3 per MMBtu this summer.

Source: Department of Energy, Price Statistics