March 11, 2008 3:30 PM, EDT

DOE Boosts Fuel-Price Forecast

Increases Driven by High Crude, Outlook Says
Larry Smith/Trans Pixs

The Department of Energy sharply boosted its projection for diesel prices, saying it will average $3.45 a gallon this year — 57 cents above last year’s average — and $3.70 in March and April.

Gasoline prices will peak near $3.50 a gallon this spring, while pump prices for that fuel will average $3.21 for the full year, about 40 cents over last year.

The projections are being driven by soaring crude oil costs, DOE said in its monthly short-term energy outlook, released Tuesday.

The annual average crude price, which was $72 per barrel in 2007, is projected to average $94 this year, but ease to about $86 per barrel in 2009.

Crude oil averaged $95 a barrel in February and will average $102 in March, DOE said.

Oil closed at a record $108.75 on Tuesday, but DOE said it expects the price to fall later this month.

Last month, DOE lowered its diesel price outlook, saying it would peak in April and May at $3.30 a gallon before falling to near to $3 later this year.