The slow moving U.S. economy is expected to help keep diesel and gasoline prices down in the near future. At the same time, a global slow growth trend line is now expected to tamp down energy demand, and thus put a check on oil and diesel price increases, into the future. The question now is whether those new projections will continue to hold as expected over the long term.

“The bigger wildcard is what happens with non-OECD [Organization for Economic Cooperation and Development] nations,” Denton Cinquegrana, editor-West Coast spots for the Oil Price Information Service (OPIS), told Fleet Owner.

“[There’s] no question that the slow to no growth in the U.S. and Europe are a factor, but when you hear talk of 7% growth in other countries, it tells me that those countries will likely be able to pick up the slack for demand [among] the OECD nations,” he explained. “That perhaps will keep a floor under oil prices.”

According to the latest data from the Energy Information Administration (EIA), diesel and gasoline prices continue to drift downward in the U.S. Diesel fuel prices dropped nearly 3 cents this week to $3.833/gal., the EIA said, but that is still up over 87 cents per gallon higher compared to the same time period in 2010.

The Midwest witnessed the biggest week-over-week decline, with prices dropping over 4 cents to $3.799/gal. Overall, U.S. average diesel fuel prices are lowest in the Gulf Coast region of the U.S., at $3.762, and highest in California, at $4.062.

In terms of gasoline, EIA said the U.S. average price is down 6 cents to $3.601, but again, that’s still over 87 cents higher compared to the same point in 2010. The Gulf coast region again sports the cheapest fuel at $3.412 while California retains the highest price for gasoline in the U.S. at $3.921.

Longer term, however, the EIA believes oil prices – and thus the cost of diesel and gasoline – should continue to drop as transportation demand continues to fall in the U.S. and other OECD nations.

In the agency’s International Energy Outlook 2011 released this week, it said OECD energy use for transportation declined by an estimated 1.6% in 2008, followed by a further decrease estimated at 1.8% in 2009, before recovering just 0.7% in 2010, with OECD transportation energy use growing by only 0.3% per year over the EIA’s projection period, which runs to 2035.

“Indications are that the return of high world oil prices and comparatively slow recovery from the recession in several key OECD nations will mean that transportation energy demand will continue to grow slowly in the near to mid-term,” the agency noted in its report. “Moreover, the U.S. and some of the other OECD countries have instituted a number of policy measures to increase the fuel efficiency of their vehicle fleets.”

Overall, use of liquid fuels for transportation – primarily derived from petroleum – should increase by an average of 1.4% per year, or 46% overall from 2008 to 2035, EIA said. The transportation sector accounts for 82% of the total increase in liquid fuel use from 2008 to 2035, with the remaining portion of the growth attributable to the industrial sector. The use of liquids declines in the other end-use sectors and for electric power generation, EIA added.

The agency estimates that the price of light sweet crude oil in the U.S. (in real 2009 dollars) should average $100 per barrel for all of 2011 by year’s end, with prices expected to slowly increase over the long term, to $108 per barrel in 2020 and $125 per barrel in 2035.

Near term, OPIS’s Cinquegrana expects gasoline will continue to see pressures from seasonality and demand concerns. However, the outlook for diesel fuel is a bit more interesting, he said.

“There is motivation on the part of refiners to maximize their diesel output as it yields the higher margins now and has been for more than a year with a few blips,” he explained. “However, the problem is diesel demand is not necessarily strong in the U.S. right now either, leaving us almost as a merchant and supplier to other parts of the globe.”