Rising Production Helping to Keep Fuel Prices in Check
Energy costs should be relatively easy on your wallet in 2014.
- (opens in new tab)
- (opens in new tab)
- (opens in new tab)
- Newsletter sign up Newsletter
This year figures to be fairly calm for energy prices, with fewer sharp swings than consumers and businesses endured in 2013. Rising output of domestic crude oil and natural gas, and reduced tensions in the energy-rich Middle East, will combine to keep energy markets well supplied throughout the year.
In fact, motorists can look forward to a bit of a break on prices at the gas pump.
After spiking this past summer on fears that the Syrian civil war might draw in the U.S., the price of oil looks set to retreat slightly, taking gasoline and diesel costs with it. Improved drilling techniques have already boosted U.S. crude output by 60% since 2008, and the boom will continue this year.

Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
2014 could be the year the U.S. surpasses Saudi Arabia and Russia to become the world’s top oil producer, says Phil Flynn, an energy analyst with the Price Futures Group.
What’s more, the flood of new oil being tapped in the U.S.—plus rising output in Canada—is coming at the same time the pace of growth in global oil consumption appears to be moderating. The International Energy Agency, which tracks global energy trends, expects the gap between daily oil demand and available supplies to widen next year, taking some pressure off prices.
Look for crude oil prices to ease by about $5 to $10 per barrel. Over the course of the year, expect West Texas Intermediate—the U.S. benchmark for crude—to average about $85 to $90 per barrel, compared with the $95 or so that crude has averaged since 2011.
As a result, prices of regular unleaded gasoline will trend down, too, averaging $3.40 per gallon in 2014, versus $3.51 in 2013. Diesel fuel will also edge a bit lower, to about $3.
Still, violence and political upheaval in several key oil producing countries bear watching. Michael Lynch, of Massachusetts-based Strategic Energy & Economic Research, says that Venezuela’s worsening economy and mounting political turmoil present the biggest geopolitical threat to his forecast for modestly lower oil prices in 2014, as instability in South America’s biggest oil producing nation raises risks to crude exports. He also cautions that the recent agreement between Western powers and Iran regarding Tehran shuttering its nuclear program—which has helped calm oil markets recently—is far from a done deal.
Meanwhile, the price of natural gas—which affects everything from petrochemical profit margins to home heating bills—is likely to keep rising, continuing a rebound that began last year. But the gains will be modest, thanks to continued steady growth in supply from wells in Texas, Pennsylvania and other states. The benchmark wellhead price for natural gas, which averaged about $3.75 per million British thermal units in 2013, figures to hit $4 or so for 2014, thanks to growing demand. An exceptionally cold winter could briefly send gas prices higher, but by spring, demand will cool off. And modestly higher prices will encourage energy firms to drill new wells, ensuring that natural gas output keeps rising.
Jim joined Kiplinger in December 2010, covering energy and commodities markets, autos, environment and sports business for The Kiplinger Letter. He is now the managing editor of The Kiplinger Letter and The Kiplinger Tax Letter. He also frequently appears on radio and podcasts to discuss the outlook for gasoline prices and new car technologies. Prior to joining Kiplinger, he covered federal grant funding and congressional appropriations for Thompson Publishing Group, writing for a range of print and online publications. He holds a BA in history from the University of Rochester.
-
-
How to Protect Your Cash and Investments in a Banking Crisis
A focus on FDIC insurance and Treasury-only money market or bond fund options can help safeguard investments when a banking crisis threatens.
By Peter Newman, CFA • Published
-
Maximize Charitable Giving Tax Savings and Give All Year
Thinking of December as ‘contribution season,’ paired with using tax-savvy giving tools, can help you spread the generosity all year long.
By Mark Froehlich, CPA, MBA • Published
-
Kiplinger's Retail Outlook: Consumers Are Still Resilient
Economic Forecasts Kiplinger's Retail Outlook: Sales this year are likely to be mostly stable, even as the economy slows.
By David Payne • Last updated
-
Kiplinger's Inflation Outlook: Inflation Eases a Bit, but Price Pressures Lurk
Economic Forecasts Kiplinger's Inflation Outlook: Inflation Eases a Bit, but Price Pressures Lurk
By David Payne • Last updated
-
Kiplinger's Trade Outlook: Imports Will Boost Q1 GDP
Economic Forecasts Kiplinger's Trade Outlook: Imports Will Boost Q1 GDP
By Rodrigo Sermeño • Last updated
-
Business Cost Outlooks for 2022: Eight Key Sectors
Economic Forecasts What’s in store for all sorts of business costs in 2022?
By The Kiplinger Washington Editors • Published
-
Our "K-Shaped," Uneven Economic Recovery
Economic Forecasts Confidence is key to the recovery, but the sentiment depends on consumers’ financial circumstances.
By Sandra Block • Published
-
7 Ways the Pandemic Will Change Big U.S. Cities
Economic Forecasts Historically, pandemics transform cities.
By Matthew Housiaux • Published
-
What Do Negative Oil Prices Mean?
Economic Forecasts With oil prices having dipped into negative territory, S&P Global Platts's Vito Turitto joins our hosts Sandy Block and Ryan Ermey to break down exactly what's going on. Also, the cohosts give an update on stimulus checks.
By Sandra Block • Published
-
Is Your State Prepared for a Recession?
Economic Forecasts The Kiplinger Letter's managing editor Jim Patterson joins our hosts Ryan Ermey and Sandy Block to break down the ramifications for states that aren't equipped to handle the upcoming recession. The pair also discusses bear market investing strategies.
By Sandra Block • Published