The future path of motor fuel prices will affect the revenues derived from established user fees because fuel prices influence travel volume, fuel economy, and the types of fuels used. Through its effect on travel volume, the price of fuel also will influence the cost of providing roads.

This section presents historical and projected price and consumption trends primarily from U.S. Department of Energy (DOE) sources: the Annual EnergyOutlook 2005 (EIA 2005a), Annual Energy Outlook 2006 Early Release (EIA 2005b), and Future U.S. Highway Energy Use: A Fifty Year Perspective (Birky et al. 2001). Each edition of the Annual Energy Outlook (AEO) is a 25-year projection of energy supply and consumption produced by DOE on the basis of its National Energy Modeling System and System for the Analysis of Global Energy Markets. Highway Energy Use is a more qualitative analysis of possible future developments in petroleum and fuels markets, highway use, and motor vehicle technology.

The AEO 2006 Early Release reference case projections show a slight increase in the U.S. retail gasoline price from its 2004 average of $1.90 per gallon to $2.13 in 2025 (in 2004 dollars) (Table 4-1, Figure 4-1). Comparison of this projection with DOE’s 2005 and 2004 AEOs illustrates the current great uncertainty in oil market projections after 3 years of sharp price increases. DOE’s 2006 reference case world oil price projection for 2025 ($48 per barrel) is 54 percent above the corresponding projection in the 2005 AEO ($31 per barrel in 2004 dollars) and the 2025 gasoline price is 31 percent higher (Table 4-1). The 2006 AEO reference case projections and assumptions are similar to the 2005 edition’s “High B” world oil price case, the highest price scenario presented in that edition. DOE explains the changes as follows: “In preparing AEO2006, EIA reevaluated its prior expectations about world oil prices in light of the current circumstances in oil markets. Since 2000, world oil prices have risen sharply as supply has tightened, first as a result of strong demand growth in developing economies such as China and later as a result of supply constraints resulting from disruptions and inadequate investment to meet demand growth…. In the AEO2006 reference case, the combined production capacity of members of the Organization of Petroleum Exporting Countries (OPEC) does not increase as much as previously projected, and consequently world oil supplies are assumed to remain tight” (EIA 2005b, 2, 4).

In the 2005 AEO edition, DOE had already raised its 2025 gasoline price projection by 12 percent in the reference case, compared with the 2004 edition, and by 37 percent in the highest world oil price projection presented. None of the AEO cases is intended to reflect consequences of petroleum supply disruptions.

DOE predicts that producers will be able to expand world oil output by nearly 40 percent and U.S. motorists will be able to increase travel by nearly 50 percent from 2003 to 2025 while the price of gasoline is maintained near $2.00 per gallon. The gasoline price will increase more slowly than the world oil price because