In 2006, crude oil prices were expensive and volatile. In 2007, prices will remain expensive and volatile — -just less so.

The federal Energy Information Administration (EIA) predicts in 2006 the average price for a barrel of crude oil will be $66. In 2007, that average will drop less than 2% to $65.

The relief in crude oil prices will lead to some easing of pump prices, EIA predicts. In 2007, the average price of a gallon of gasoline will fall 3.5% to $2.48, from $2.57 in 2006. Diesel prices will fall 2.6% to $2.63, from $2.70.

The relatively flat growth of oil consumption in the U.S. will allow global oil production capacity to catch up to demand. In 2007 the U.S. is expected to consume 21 million barrels per day (1.5%) more petroleum than in 2006. Meanwhile, worldwide consumption is projected to grow by 1 million b/d and by 1.5 million b/d in 2007.

“We anticipate prices will peak in May 2007 and then ease a little bit for the remainder of the year…but in historic terms still be high,” EIA economist Neil Gamson told Fleet Owener. May is the start of the summer driving season. That primarily affects gasoline prices, but affects crude oil consumption.

In 2006, both gasoline and diesel underwent significant spec changes nationally. MTBE was removed from gasoline and refiners switched from low-sulfur diesel to ultra-low- sulfur diesel. Problems with the 2006 transitions had largely been worked out and won't likely impact national fuel costs, according to Gamson.

But perhaps less predictable than fuel price trends is what the Democratic-controlled 110th Congress has in store for the nation's energy policy.

Allen Schaeffer, executive director of the Diesel Technology Forum, believes that biofuels and fuel economy are the largest targets for reform in 2007.

“Certainly the new Congress coming in offers new opportunities for discussing these key issues,” Schaeffer told Fleet Owner. “Whether or not there gets to be a serious discussion about climate change remains to be seen. I feel there will be a new chapter in energy policy. [Fuel] consumption will add a new twist to the discussion on energy policy.”