How have you been enjoying these lower gas prices as of late? You’re probably jubilant about the extra dollars in your pocket over the past few months. Want even more good news? These gas prices are expected to last into the new year.
According to a new short-term market report released Wednesday from the Department of Energy’s Energy Information Administration (EIA), the average price of gasoline in the United States will be around $2.94 a gallon in 2015, which is a 44-cent drop from an outlook issued a little more than month ago.
Gas prices, says the EIA, are sitting at their lowest level in close to four years. The EIA’s projection is similar to the automobile club AAA’s recent forecast of $2.91 per gallon in 2015.
Meanwhile, the EIA said the benchmark U.S. crude oil prices will average $95 per barrel this year, but next year that number will descend to $77.75 a barrel, far below its initial expectations of $97.72 (2014) and $94.58 (2015). Brent will experience an average price of $101.04 a barrel this year and $83.42 a barrel next year, a considerable drop from last month’s forecast of $101.67 per barrel next year.
In the last few months, oil prices have dramatically fallen due to concerns the Organization of the Petroleum Exporting (OPEC) won’t reduce production, while the U.S. has enhanced its oil production capabilities this year because of fracking. U.S. production reached 8.9 million barrels per day last month, the highest monthly level since Mar. 1986. It’s expected to surpass nine million barrels next month.
Ostensibly, Saudi Arabia’s role in the global oil market continues to erode. The report stated that the nation’s position remains uncertain moving forward: “Saudi Arabia will continue to play some role as a swing producer, but perhaps to a lesser extent, as the country is sensitive to significant losses in market share.”
Saudi Arabian Oil Minister Ali al-Naimi confirmed Wednesday the possibility of a price war in the oil market is essentially a misunderstanding and OPEC leaders are returning to the negotiating tables.