Government Forecast predicts Gas will fall below $3 A Gallon soon – CBS Boston

(CBS/CNN) – Pump prices are finally starting to drop, and that trend will accelerate significantly in the coming months, according to new government forecasts.

US Energy Information Administration speak Third, the national average for regular gasoline will likely drop to $3.01 a gallon in January. For 2022, gas prices are expected to average $2.88.

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That call is based on EIA projections that global oil production will outpace demand next year – particularly with the arrival of the Omicron variant. This would be a reversal of the past 18 months, when output was slow to meet rising demand as the world reopened from Covid-19.

The EIA, an arm of the Department of Energy, cited the risk that the new variant reduces global energy consumption and expectations of stronger supply from OPEC+, US shale oil companies and other countries. other major manufacturers.

The agency also pointed to the impact of US intervention in energy markets, highlighting the largest-ever release of barrels from the US Strategic Petroleum Reserve.

Brent, the main driver of pump prices, is expected to average $70 per barrel in 2022. This is down from an average of $84 in October and $81 in November.

In Massachusetts, Gasoline prices have finally dropped this week – by two cents. The average price per gallon in the state is $3.40, a nickel more than the national average.

“Consumers can start a pump break now, but that’s not for good reason,” AAA Northeast’s Mary Maguire said in a statement. “The potential economic slowdown caused by COVID-19 hurts everyone and could lead OPEC to cut production if oil prices get too low.”

Gas prices in Massachusetts were flat from a month ago, and $1.30 higher than this time last year.

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In November, gasoline prices averaged $3.39 nationally — the highest level since September 2014, the EIA said. But the agency expects that average to drop to $3.13 a gallon in December and continue to decline next year.

Citing new travel restrictions imposed following the arrival of Omicron, the EIA lowered its oil consumption forecast for both the fourth quarter of this year and the first quarter of next year.

“The potential impact of the spread of this variation is uncertain, which presents downside risks to the global oil consumption forecast, particularly for jet fuel,” the EIA said.

Oil prices fell after Thanksgiving as investors feared Omicron would derail booming energy demand. However, crude has since rebounded amid anecdotal evidence of milder symptoms from Omicron.

The EIA acknowledges there is a lot of uncertainty surrounding the health crisis.

“This is a very complex environment for the entire energy industry,” Steve Nalley, acting EIA administrator, said in a statement. “Our forecasts for gasoline and other energy prices, consumption and production are subject to change significantly as we learn more about how the response to the Omicron variant may affect demand. oil and the broader economy.”

(© Copyright 2021 CBS Broadcasting Inc. All rights reserved. Matt Egan of CNN contributed to this report.)

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