Federal energy officials expect average oil and gasoline prices to drop this year and next, while natural gas prices will likely rise, according to a short-term outlook released Tuesday.
The US Energy Information Administration predicts that the crude oil market will “loosen” in the coming months as global supply increases. That will help crude prices average $105 a barrel this year -- $7 less than in 2012 – before dropping in 2014 to $99 a barrel, on average. That decrease will also help lower retail gasoline prices nationally over the next two years, with the fuel costing about $3.44 at the pump in 2014.
Even as oil prices fall, the average price of natural gas -- which has been extremely cheap of late because of a boom in domestic production -- is expected to rise.
Natural gas costs will near $4 per million British Thermal Units in 2014, up from $2.75 per million British Thermal Units this year. That could be problematic in New England and other regions, which have becoming increasingly reliant on natural gas to generate electricity.
In Massachusetts, for example, natural gas currently accounts for more than 75 percent of electricity generation, according to the latest data from the Energy Information Administration.