Retail pump prices for diesel and gasoline remained in decline this week across the U.S., with diesel slipping under the $4 per gallon mark in four regions of the country, according to data tracked by the Energy Information Administration (EIA).

The U.S. average retail pump price for diesel dropped 4.1 cents this week to $4.006 per gallon, the agency said, which is 14.1 cents per gallon cheaper compared to the same week in 2012. Diesel prices dropped in every region of the country, falling under the $4 per gallon mark in the Lower Atlantic ($3.983) and Midwest ($3.979), along with the Gulf Coast and Rocky Mountains (both $3.935).

Gasoline prices also continued to fall this week, the EIA noted, though only by 1.6 cents to a U.S. average of $3.68 per gallon. However, the agency pointed out that’s 23.8 cents per gallon cheaper when compared to the same week in 2012.

Retail prices for gasoline fell in every region of the country except the Midwest, where prices increased 1.2 cents per gallon, while the Rocky Mountains ($3.469) and Gulf Coast ($3.565) hosted the lowest retail gasoline pump prices in the U.S.

Yet despite the downward angle of fuel prices over the last several weeks and EIA forecasts that this trend should continue, the agency cautioned in its latest Short Term Energy Outlook (STEO) that “energy price forecasts are highly uncertain and the current values of futures and options contracts suggest that prices” could shift back into an upward direction.

[By contrast, some observers believe rising diesel prices are a good thing, as Forbes Columnist Bill Conerly noted in a recent article.]

That being said, the EIA noted that weekly U.S. average regular gasoline retail price fell in early March for the first time since mid-December and continue to decline, with lower crude oil prices resulting in monthly average regular gasoline prices staying near the February average of $3.67 per gallon over the next few months.

The agency now expects the annual average retail price for regular-grade gasoline to decline from $3.63 per gallon in 2012 to $3.55 per gallon in 2013 and $3.38 per gallon in 2014. For diesel, EIA said the annual average should drop to $3.90 per gallon for this year, compared to $3.97 in 2012, and keep falling to $3.80 in 2014.

EIA also expects that the Brent crude oil spot price – the global benchmark for oil prices – should average $108 per barrel in 2013 and $101 per barrel in 2014, compared to an average $112 per barrel in 2012 that spiked to $119 per barrel in early February this year.

The agency added that the projected discount of West Texas Intermediate (WTI) crude oil – a domestic U.S. marker for oil prices – to Brent, which increased to a monthly average of more than $20 per barrel in February, should average $16 per barrel in 2013 and $9 per barrel in 2014, as planned new pipeline capacity lowers the cost of moving mid-continent crude oil to the Gulf Coast refining centers.

EIA also noted in its latest STEO report that U.S. crude oil production exceeded an average level of 7 million barrels per day (bbl/d) in November and December last year – the highest volume since December 1992 – with the agency estimating that U.S. total crude oil production averaged 6.5 million barrels per day (bbl/d) in 2012, an increase of 800,000 bbl/d from 2011.

Looking forward, the agency projects that domestic crude oil production should average 7.3 million bbl/d in 2013 and 7.9 million bbl/d in 2014. 

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