EIA predicts US gasoline prices headed for record highs
The US Energy Information Administration said Monday gasoline prices would likely set record highs this summer, although relief may come early in the driving season as inventories are built. It expects average regular unleaded gasoline prices of between $1.50 and $1.75/gal this summer.
By the OGJ Online Staff
WASHINGTON, DC, May 8 --The US Energy Information Administration said Monday gasoline prices will likely set record highs this summer although relief may come early in the driving season as inventories are built .
"We currently expect national average monthly prices for regular gasoline to range between $1.50 and $1.75/ gal this summer," EIA said in its latest short-term outlook. It said the mean of the range ($1.60/gal) for the entire summer is about 5% above the record set last year.
EIA cautioned that these prices are national averages and gasoline prices vary widely by region due to differences in environmental restrictions and different levels of local taxes.
Rapid increases in spot and wholesale gasoline prices have been sustained over the last month to 6 weeks leading in turn to widespread increases in US pump prices in April, EIA said.
"Momentum in the wholesale market is likely to continue to spill into the retail market in the near term, making additional weekly increases in pump prices likely. It is quite possible that the rate of increase will slow from the torrid pace seen in April, but a somewhat higher average monthly price in May compared to April is likely," the agency said
EIA also said that it has revised its demand numbers upwards due to better data collection. It also said that market reaction to low inventories in gasoline and gasoline blending components that evolved out of the events last winter "was much more intense in the short run than was allowed for in our last outlook."
Nevertheless, EIA expects supplies to build and prices to moderate. It said chances that spot and retail prices will calm down (perhaps even decline some from current levels) "are good."
Energy Sec. Spencer Abraham said EIA's findings "reaffirm the need to develop additional sources of energy while building and maintaining the necessary infrastructure to move those supplies to market. The US is far too energy-dependent on foreign resources and our refineries are increasingly strained, especially during the summer driving season. Until we take steps to address these problems, we will continue to experience volatility in energy markets and higher prices passed on to consumers at the gas pump."
Abraham said the administration would propose a national energy policy soon.