According to International Energy Agency (IEA) website publication on Short-Term Energy Outlook (STEO) January 2023 report:
Gasoline and diesel prices: Gasoline and diesel prices in our forecast generally decline as wholesale refining margins and crude oil prices fall. In December 2022, the U.S. retail price for regular-grade gasoline averaged $3.21 per gallon (gal), and the retail diesel price averaged $4.71/gal. Both December prices were the lowest since the beginning of Russia’s full-scale invasion of Ukraine in February. In our forecast for 2023 and 2024, U.S. refinery runs and gasoline and diesel production are higher than in 2022, which along with increasing global refinery capacity, will contribute to narrowing U.S. refining margins in 2023 and 2024.
We forecast retail gasoline prices will remain close to current levels and average about $3.30/gal in 2023. In 2024, we forecast retail gasoline prices will average about $3.10/gal and fall below $3.00/gal by the end of the year. We forecast retail diesel prices to average about $4.20/gal in 2023 and near $3.70/gal in 2024. Diesel prices will remain higher than gasoline prices as the market continues to adjust to disruptions largely related to responses to Russia’s full-scale invasion of Ukraine. Russia had been a major supplier of diesel fuel to Europe, which is now importing more diesel from the Middle East and India.
Gasoline and distillate inventories: In 2022, both gasoline and distillate inventories in the United States were below their previous five-year (2017–2021) averages for the entire year because of reduced refinery capacity, less-than-average imports, and expanding exports. Higher refinery runs and less consumption contributed to distillate fuel inventories increasing during 4Q22 by more than the previous five-year average. We estimate that 5.1 million barrels per day (b/d) of distillate was produced in the United States during 4Q22, up 5% from a year earlier, as refiners increased production in response to high crack spreads—the difference between the price at which refiners sell fuel and the price of crude oil.
We expect U.S. distillate inventories will increase in 2023 due to increasing refinery runs as refiners capitalize on high distillate crack spreads. Refiners have a limited ability to shift their product yields, so we also expect gasoline production to increase in 2023 alongside distillate production. As a result, we forecast gasoline inventories will rise above their previous five-year average from May 2023 through the end of the year. Although net U.S. exports of gasoline will increase in 2023, we expect these volumes will come from increased gasoline production. We forecast almost no change in U.S. gasoline consumption over the next two years. Our expectation of relatively flat gasoline consumption stems from increases in vehicle miles traveled being offset by increases in the fuel efficiency of the vehicle fleet.
Declining freight activity and declining manufacturing activity in distillate-intensive industries led to decreased U.S. distillate consumption at the end of 2022. Our 4Q22 estimate for U.S. distillate consumption of 3.9 million b/d was the lowest for a fourth quarter since 2015. In our forecast, U.S. distillate consumption declines slightly in 2023. However, we expect distillate consumption will pick up in 2024 as the rate of economic growth increases.
