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Pump prices for gasoline are rising and likely will average about a 25 cents a gallon more than last summer, but not enough to keep people home according to an Associated Press report.
The Energy Department’s new “seasonal outlook,” released Tuesday (April 11), projects that the price for regular grade gasoline will average $2.62 a gallon, barring any unexpected supply disruptions. Gasoline prices have soared since February.
Last week motorists paid on average $2.68 a gallon nationwide for regular, an 18-cent increase in two weeks and 40 cents higher than the national average a year ago.
Growing demand, high crude oil costs, requirements for low-sulfur gasoline and greater demand for corn-based ethanol as an additive all “are expected to keep consumer prices for motor fuels … high in 2006,” said the report by the department’s Energy Information Administration.
The high prices are not expected to dampen demand during the April-September heavy driving season. Motorists are expected to use an average 9.4 million barrels of gasoline a day, or 1.5% more than last summer, according to the Energy Department agency.
The agency cautioned that prices can vary by 27 cents to 50 cents a gallon between different regions of the country and that prices could spike higher if there are unexpected supply disruptions caused by the weather or refinery problems.
Some analysts said gasoline could return to $3 a gallon or more if crude oil prices increase sharply or there is concern about hurricane damage to producers in the Gulf of Mexico.
The markets are likely to be more jittery about the weather this summer in light of the widespread disruption of Gulf oil and gasoline production caused by hurricanes Katrina and Rita last year.
Gasoline spiked to a national average of $3.07 a gallon — and considerably higher in some areas — after last year’s hurricanes.
“News of any developing hurricanes and tropical storms with a potential to cause significant new outages could add to (price) volatility … in the latter part of the summer,” said report said.
Prices at the pump have been climbing since February when the national average for the month was $2.25 a gallon.