DOE Says Heating Oil Prices to Soar This Winter

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eating oil prices — which often parallel diesel in winter months because both are distillate fuels competing for stocks — will rise by about 31% this winter compared to the 2004-2005 winter, the Department of Energy said Wednesday.

Retail diesel fuel prices are expected to hit their highest average monthly level ever, at over $2.71 per gallon, in September, and the price will also be the highest diesel price in more than 50 years, adjusted for inflation, DOE's Energy Information Administration said in its monthly short-term energy outlook.

Last year’s heating-oil prices were 34% higher than the previous year, reflecting not only high crude oil prices, but also strong demand in the international market for distillate fuels, EIA said.

Average retail regular gasoline prices, which spiked sharply in the wake of Hurricane Katrina last week, and are expected to average close to $3 per gallon for September, though “improvements in the petroleum supply situation should result in substantial pump price decreases by the end of the year,” EIA said.

The average pump price for regular gasoline for the third quarter is now expected to be about $2.57 per gallon, EIA said.

EIA said light sweet crude oil prices, which averaged $65 a barrel in August, would be at or under $70 a barrel in September under most scenarios, barring more hurricane damage. The third-quarter projected average is about $20 higher than a year ago and $5 higher than in the previous outlook.

he 2006 average U.S. oil demand of 21.16 million barrels per day is 100,000 barrels, or 0.5%, less than that projected in EIA’s previous short-term outlook as a result of the substantial price increases.