EIA: $126 per barrel average through ’09

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The U.S. Department of Energy said June 11 that oil prices are expected to stay well above $100 a barrel and American motorists can expect gasoline prices around $4 a gallon through next year.

Guy Caruso, head of the department’s Energy Information Administration, told a House of Representatives hearing that crude oil prices are likely to average $126 a barrel in 2009, four dollars higher than this year as oil supplies and demand are expected to remain tight.

Many Americans are fuming over high gas prices and lawmakers, many of whom face voters in the November election, are anxious to show they are trying to do something. Senate Republicans on July 10 blocked a proposal to tax the windfall profits of some of the biggest U.S. oil companies.

EIA, in a report, said that the high price of gasoline has reduced expected demand for this summer but not enough to dampen prices, largely because crude oil prices continue to climb on global supply concerns and weakness in the U.S. dollar prompting investors to bid up oil as a hedge. Oil prices are currently above $130 per barrel on the New York Mercantile Exchange.

Caruso testified that new auto fuel economy requirements and the increased use of ethanol and other alternative fuels is expected to produce “a substantial reduction” in oil use and oil imports over the next two decades.

Predicting future oil and gasoline prices is highly uncertain, Caruso acknowledged. EIA projects oil prices to decline to $86 a barrel in 2010 and then begin increasing to $107 by 2015.

Caruso’s agency bases its gasoline projections on assumptions of future oil prices, expectations of demand and economic trends. It has revised its figures upward several times since last year — not having anticipated the huge surge in global oil costs.

A panel of energy experts, told the House hearing that people should not expect any quick fixes to energy problems.

They said one answer is more conservation and a shift to alternative fuels — transitions that would take time. Caruso told the lawmakers that new auto fuel economy requirements and the increased use of ethanol and other alternative fuels are expected to produce “a substantial reduction” in oil use and oil imports over the next two decades.

—The Associated Press