Source: U.S. Energy Information Administration. Summary and analysis by S2V Advisory.
What happened
The U.S. Energy Information Administration released its October Short-Term Energy Outlook on October 6. Retail diesel averaged $6.29 a gallon in September, and EIA expects it to stay above $6 through the fourth quarter before declining. Its 2027 forecast is an average near $4.50. Gasoline averaged $4.35 in September and is forecast at $3.56 for 2027. EIA attributes September’s jump, which included a $23 rise in Brent crude, to disruptions in the Middle East and tight diesel markets, and expects prices to ease as production resumes and inventories rebuild.
The outlook also covers power and gas. EIA puts 2026 wholesale electricity prices at $52 per megawatt-hour, 11% above 2025, and expects commercial and industrial demand to grow about 3% in 2027. The Henry Hub natural gas price is forecast to average $3.16 per million Btu in 2027, 9% below 2026. EIA’s administrator said relatively high gas inventories “provide a cushion for heating demand” this winter.
What it means for buyers
A forecast is not a price, but it tells you the direction a supplier will argue against. Carriers and energy suppliers are quoting at the top of the curve. Buyers signing now should make sure the contract follows the curve down.
- Do not fix fuel at today’s level. A carrier offering to roll the surcharge into a flat rate is offering to lock in September. Keep the surcharge indexed, and check the peg price and step size so the index actually moves your invoice.
- Make adjustment symmetrical. Any clause that lets a supplier raise prices on fuel or power must lower them on the same trigger, with the same lag. Ask to see the last three adjustments to confirm it works both ways.
- Be careful with long electricity terms. With wholesale power up 11%, a multi-year fixed contract signed this quarter locks in a high year. Consider shorter terms, layered purchases or a block-and-index structure, and compare them on EIA’s own numbers.
- Separate the heating conversation. Gas inventories are high. A facilities supplier citing energy costs for a winter increase should be asked which energy.
The contracts that handle a spike well are the ones that were written for the decline. See our logistics and freight category page.