Prices for crude and oil-based fuels, which have been declining in recent weeks, will continue to fall through the end of the year and will average lower in 2014, according to a federal report released Wednesday.
The Energy Information Administration lowered its projection for the average price of regular gasoline for the fourth quarter of 2013, cutting it by 10 cents to $3.24 per gallon in its Short-Term Energy Outlook.
Since the beginning of September, the weekly national average price of gasoline has dropped by more than 40 cents. This week, it hit its lowest price in 33 months.
For the year, EIA expects gasoline to average $3.50 per gallon, down 13 cents from last year’s average. The agency expects it to fall further in 2014, averaging $3.39.
The price cuts come as U.S. oil production soars. In October, the country produced more crude than it imported, for the first time since February 1995. The EIA forecasts that U.S. oil production will jump by 1 million barrels per day next year, reaching 8.5 million barrels per day.
The White House highlighted the trend in a news release Wednesday, citing the Obama administration’s support for domestic production growth, as well as greater energy efficiency and use of alternative fuels.
“This month, domestic oil production, which is at a 24-year high, surpassed foreign oil imports, which are at a 17-year low — a result of both increased production and Administration policies like increased fuel economy standards that cut oil consumption, cut carbon pollution, and cut consumer bills,” the press release said.
As the U.S. pumps more oil, the agency forecasts that the crude oil prices will decline. West Texas Intermediate crude, the U.S. benchmark, will drop from an average of $97.74 per barrel this year to $95 per barrel in 2013, the EIA projects. Brent crude, the international benchmark, is projected to fall from $108.01 to $103.
As a result, the WTI-to-Brent discount, which reached an average of $20 per barrel in February, will narrow to $8 in 2014, EIA forecasts.
Natural gas prices, however, are projected to rise. The Henry Hub spot price, the U.S. natural gas benchmark, is forecast to rise from $3.68 per million British thermal units this year to $3.84 per million British thermal units next year.