Gasoline and diesel price forecast - outlook for Europe and the world
The first chart shows that the world average gasoline price is expected to increase slightly this year reaching 1.04 USD per liter in July 2017. This is a weighted average of the retail gasoline prices in 100 countries that represent over 90 percent of the world petroleum consumption.
For Europe, gasoline prices are expected to increase from 1.31 euro per liter in March 2017 to 1.32 euro per liter in January 2018. The average is based on 36 European countries including Germany, the UK, France, Italy, Spain, and Russia.
For diesel fuel, on average European prices are expected to increase from 1.19 euro per liter in March 2017 to 1.21 euro per liter by this time next year.
Brief methodological notes:
For each of the countries in our database, we estimate an econometric model where the retail prices of 95-octane gasoline and diesel fuel are explained by the Brent crude oil price, the USD exchange rate, seasonal factors, and a time trend that reflects inflation in the marketing and distributions costs as well as tax and policy changes. The models account for over 95 percent of the retail fuel price changes.
We use the estimation results from the models to calculate the predicted retail prices of gasoline and diesel fuel given certain assumptions about the future values of crude oil prices and the exchange rates. For example, for crude oil prices we used data from the futures contracts at the NYMEX and the oil price forecasts by the U.S. Energy Information Agency and the International Monetary Fund.
We use weekly data but we also check our estimations with monthly and quarterly averages to confirm the estimation results. The time period used in the models covers January 2005 to now but we also check our estimates using sub-periods of relative calm in the crude oil market as well as periods of high volatility. We also check the estimations for periods of general upward and downward trends in the crude oil prices. We can provide more detail on our methodology upon request.