Federal agency expects gasoline price relief to continue

Though gasoline prices have bounced back well above $2 a gallon, no other big increases are expected this year, the Energy Information Administration said Tuesday in its monthly short-term energy outlook.

For the year, the energy agency, an arm of the U.S. Department of Energy, expects gas to average almost $1 less a gallon than in 2014. And if that prediction holds up, the agency said, the average motorist will save $710 on gas this year compared with 2014.

“That’s great news now for the consumer,” said Mike Right with AAA Missouri. “And over time prices will go up, especially switching to summer fuel from winter fuel. But that increase might not be nearly as severe as last year’s.”

On Tuesday, AAA pegged the average price for regular unleaded on the Missouri side of the Kansas City area at $2.28 a gallon. That was up sharply from $1.99 just a month ago but still $1 a gallon less than a year ago.

Prices were a few cents higher on the Kansas side, where fuel taxes are higher, and several cents higher in many other parts of the country, as they usually are. The national average was $2.45, AAA said, up from $2.19 a month ago and down from $3.49 a year ago.

Gasoline prices are following crude oil prices, which have ticked up recently but still are less than half of last year’s peak. The world is awash in oil, in part because U.S. production is up and other big producers such as Saudi Arabia aren’t cutting back. U.S. oil inventories are so high that storage capacity is tightening in such places as Cushing, Okla., where several pipelines converge.

Some U.S. producers now are cutting back, or at least pausing, in the face of the lower crude prices. But U.S. supplies are still so high, it would take time for that to affect inventories, Right said, adding that idled rigs often can be started up again quickly.

The Energy Information Administration on Tuesday even lowered its 2015 estimate for the price of West Texas Intermediate, the benchmark U.S. oil, to $52.15 a barrel from its February projection of $55.02. Its price slipped below $49 on Tuesday.

So don’t expect gas below $2 to come back. But barring the unforeseen — war in the Middle East or hurricanes knocking out refineries — gas could stay well below what it cost last year.

This story was originally published March 10, 2015 at 4:09 PM with the headline "Federal agency expects gasoline price relief to continue."