Energy Forecasters See Much Steeper Fuel Prices

Arkansas diesel prices are a dollar higher than a year ago, while retail gasoline prices have risen for the sixth straight week, according to the U.S. Energy Department’s weekly energy report.

And with crude oil prices now well above $100 a barrel, no relief is expected until well after the summer drive season when pump prices could touch $4 a gallon for regular unleaded, the Energy Information Administration said.

Meanwhile, the EIA on Tuesday raised its short-term outlook on spot crude and retail gasoline price due to the continued tightening of world oil markets caused by unrest in Libya and other North African and Middle Eastern countries.

As a result, the EIA’s new forecast for the average cost of crude oil to refiners jumped to $105 per barrel in 2011, $14 higher than in the previous outlook. The 2011 forecast for West Texas Intermediate increased $9 to $102 per barrel, mainly due to the projected continued price discount for light, sweet crude compared to international Brent and other heavier crudes.

Also, the EIA now expects the retail price of regular-grade motor gasoline to average $3.56 per gallon in 2011, 77 cents per gallon higher than the 2010 average and about 40 cents above the projected price in the previous outlook a month ago.

“There is also significant uncertainty surrounding the forecast, with the current market prices of futures and options contracts for gasoline suggesting a 25 percent probability that the national monthly average retail price for regular gasoline could exceed $4.00 per gallon during summer 2011, “ the EIA said.

In Arkansas, diesel prices climbed closer to $4, settling this week at $3.81 a gallon, according to AAA’s daily fuel gauge. That price is 16 cents higher than a week ago and exactly one dollar higher than the same period a year ago. Arkansas motorists are paying an average of $3.45 per gallon for regular unleaded, up 18 cents from last week and 89 cents higher than a year ago.

Pump prices in Arkansas’ metropolitan areas range from a low of $3.42 per gallon in the Pine Bluff area to a high of $3.45 per gallon in the Little Rock-North Little Rock area, Texarkana and the Fayetteville-Springdale-Rogers area. Motorists in Fort Smith are paying an average of $3.44 a gallon to fill up their tanks.