U.S. Lifts Summer Fuel Price Forecast
The federal government’s top energy forecasting agency Tuesday raised its estimate for the average price that U.S. drivers will pay for gasoline this summer to $2.88 a gallon on the strength of high oil costs and robust fuel demand.
The predicted average nationwide price for regular gasoline from April through September is up from $2.76 a gallon estimated in June, the Energy Department said in its monthly forecast.
Gasoline in the same period last year averaged $2.375 a gallon, but demand was damped by sudden price increases brought about by hurricanes Katrina and Rita.
This year, “the price rises have been gradual, so there hasn’t been a major effect on driving patterns,” said Neil Gamson, an economist with the department’s Energy Information Administration in Washington who worked on the report. “If prices doubled quickly there would be changes in behavior.”
Still, the Energy Department expects that higher fuel prices will reduce demand somewhat compared with last month’s forecast. For the current July-September quarter, the department revised down its forecast for U.S. gasoline demand growth by 10,000 barrels a day to 9.4 million barrels a day.
Pump costs in many cities already top $3 a gallon.
Nationwide, the average pump price for regular gasoline rose 3.9 cents in the week ended Monday to $2.973 a gallon, the highest since September, the Energy Department said. It was the highest average since Sept. 5, when the average surged to a record $3.069 a gallon after Hurricane Katrina slammed the Gulf Coast, toppling oil platforms, destroying undersea pipelines and shutting refineries.
In California, the average retail price increased 3.5 cents to $3.224 a gallon in the week ended Monday.
The Energy Department also raised its estimate for the price of crude oil this year because of increased global fuel consumption. West Texas Intermediate crude oil, the U.S. benchmark, is expected to average $69.13 a barrel this year, up 1.5% from $68.11 estimated last month and 22% higher than the average $56.49 a barrel in 2005.
Crude oil futures in New York, which allow delivery of the West Texas grade, closed at a record $75.19 a barrel July 5.
U.S. oil demand will average 20.7 million barrels a day this year, up 0.4% from 2005, the Energy Department said. Consumption next year will rise 2.4% to 21.2 million barrels a day.