The annual average regular-grade gasoline retail price, which averaged $2.78 per gallon in 2010, will increase to $3.56 per gallon in 2011, and will average $3.54 per gallon in 2012, the Energy Information Administration (EIA) predicted in its latest Short-Term Energy Outlook.

The increase in retail prices in 2011 reflects not only the higher cost of crude oil but also changes in average U.S. refinery gasoline margin (the difference between refinery wholesale gasoline prices and the average cost of crude oil) from $0.34 per gallon in 2010, to $0.50 per gallon in 2011 and $0.43 per gallon in 2012, the EIA said.

On-highway diesel fuel retail prices, which averaged $2.99 per gallon in 2010, are expected to average $3.85 per gallon in 2011 and $3.87 per gallon in 2012, according to the Outlook, released September 7. Projected U.S. refinery diesel fuel margins increase from an average of $0.38 per gallon in 2010 to $0.65 per gallon in 2011, then fall to an average of $0.58 per gallon in 2012, according to the EIA forecast.

Commercial crude oil inventory levels ended August 2011 at an estimated 359 million barrels, the same level as last year but 29 million barrels higher than the previous 5-year average for that month. Following the completion of the release of about 31 million barrels of crude oil from the U.S. Strategic Petroleum Reserve (SPR), commercial crude oil stocks are expected to rise to 364 million barrels by the end of September 2011, 34 million barrels higher than the previous 5-year average. Commercial crude oil stocks are gradually drawn down to near their 5-year averages by the end of 2012.

EIA expects refined product inventories to remain close to their 5-year averages despite the recent SPR release. Total motor gasoline stocks at the end of August 2011 were an estimated 208 million barrels, down 13 million barrels from last year but 2 million barrels above the previous 5-year average for that month. Distillate fuel oil stocks ended August 2011 at an estimated 157 million barrels, down 13 million barrels from the same time last year but 7 million barrels above the previous 5-year average.

Projected total motor gasoline and distillate inventories average about 1 million barrels and 7 million barrels higher, respectively, than their previous 5-year averages at the end of 2011.

The EIA said it lowered its economic growth assumptions substantially compared with last month’s Outlook. The latest forecast assumes that U.S. real gross domestic product (GDP) grows by 1.5 percent this year and 1.9 percent next year compared with 2.4 percent and 2.6 percent, respectively, in the previous Outlook. World oil-consumption-weighted real GDP grows by 3.1 percent and 3.8 percent in 2011 and 2012, respectively, compared with 3.4 percent and 4.1 percent in the last Outlook. With weaker economic growth and lower petroleum consumption growth, EIA expects the U.S. average refiner acquisition cost of crude oil to rise from an average of $100 per barrel in 2011 to $103 per barrel in 2012, compared with an increase to $107 per barrel in 2012 in last month’s Outlook.