Fuel Costs Likely To Remain High

The Energy Department said U.S. oil prices next year will be lower than previously forecast, but motorists will see little reprieve from high gasoline and diesel costs at the pump because of strong growth in China and other emerging countries.

Global oil consumption is expected to rise 1.6% from 2011 to a record 89.6 million barrels a day in 2012 as China’s surging energy needs offset lackluster growth in the U.S., Japan and other developed countries. Worldwide, crude oil and fuel consumption will continue growing from its record-high levels in 2010, albeit less robustly than previous estimates, the Energy Department said in its Short-Term Energy Outlook.

China and other emerging economies account for all the projected growth in oil consumption through 2012, the department said. As China’s industries and auto fleets expand, the country is burning more and more oil, with consumption in 2012 projected to jump 6%, to 10.6 million barrels a day.

With U.S. economic growth lagging, the Energy Department cut forecasts for oil and fuel prices in 2012. Still, even with cheaper domestically-priced oil, gasoline and diesel likely will remain near the high levels reached in 2011, partly because many U.S. refiners along the Gulf of Mexico and East Coast rely on more-expensive foreign crude. ◆