CLEVELAND — You’ll pay more, on average, for gasoline, natural gas and electricity this year than you did last year and even more in the next couple of years, say federal forecasters.
The higher prices — and these are increases in average prices — shouldn’t break most household budgets, but they should serve as a reminder that cheap energy is not necessarily permanent.
The U.S. Energy Information’s monthly Short-Term Energy Outlook, issued today, is forecasting a U.S. average gasoline price of $2.39 a gallon this year and $2.44 in 2018, which is about what the average price was in 2015 and still at least $1-a-gallon below average prices from 2012 through 2014.
The average price in Cleveland today, reports GasBuddy, is just $2.02, well below the national average of $2.26. The average Ohio gas price is $2.04.
The highest Ohio average prices occurred in May 2011 when prices peaked at $4.16 a gallon, according to the AAA. Highest Cleveland average price was $4.15 a gallon in May 2011.
The interplay between U.S. shale oil producers and OPEC’s effort to cut back production through June of this year, as well as global demand and global supplies are the main players in what gasoline costs.
The EIA now sees U.S oil production recovering as more rigs are deployed every week in response to oil prices remaining above $50 a barrel. Contracts for the best grades of U.S. oil were running at just over $52 a barrel Tuesday, down almost $1 from Monday’s run-up. Future contracts into this summer were trading at more than $54 a barrel.
Natural gas production is now expected to increase this year and again next year, which is a significant reversal of the EIA’s recent past forecasts that mirrored declining production as most gas producers parked their drilling rigs as prices fell.
But along with expected increases in gas production this year and next, new demand driven by new power plants and export terminals is expected to push prices slightly higher through next year. Several gas power plants are under construction in Ohio, for example, and will significantly increase demand for gas — while pushing power prices down.
The EIA sees “spot” prices, what a gas supplier would pay without a contract, increasing this year by almost $1 per 1,000 cubic feet to an average of $3.54 per Mcf and increasing in 2018 to an average of $3.81 per Mcf.
In Ohio, where Utica shale gas has driven down prices in the eastern side of the state to below national prices, suppliers continue to expect a discount because of oversupply.
But that discount has already fallen compared with previous years and is expected to continue to shrink. The discount affects Dominion East Ohio customers who are receiving the Utica gas.
Columbia Gas of Ohio’s standard price more reflects the national contract prices and is therefore significantly higher than Dominion consumer prices.
Electricity prices in Ohio are another story and the state’s two largest utilities FirstEnergy and American Electric power prepare a full lobbying effort to persuade lawmakers to change the state’s 16-year de-regulation rules that have given customers the ability to shop for their power suppliers. Both companies have also managed to increase prices on the delivery side of the bill.
The EIA expects U.S. residential electricity prices to average 12.93 cents per kilowatt-hour this year and 13.24 cents per kilowatt-hour in 2018.
The Public Utilities Commission of Ohio estimated the average Ohio price for electricity in December 2016 was 13 cents per kilowatt-hour and that the average consumption was 750 kilowatt-hours per month.
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