Energy Dept. predicts continuing rise in gas prices over summer

WASHINGTON (AP) — A motorist can expect to see higher gasoline prices, averaging $1.76 a gallon, throughout the summer as supplies will remain tight and demand is expected to increase to record levels, the Energy Department predicted Thursday.

The analysis by the Energy Information Administration said fuel prices will probably continue to increase over the next three months and then decline somewhat during the rest of the summer. It said the average between now and the end of June is likely to be about $1.81 a gallon nationwide.

EIA Administrator Guy Caruso said prices were expected to be significantly higher in some regions, such as the West Coast, and expressed concern about possible price surges in the Northeast if gasoline imports are unable to meet new requirements for cleaner burning fuel and the ban on MTBE additive in New York and Connecticut.

”Crude oil, gasoline and natural gas markets are expected to remain tight,” Caruso told a conference of state energy regulators.

Caruso said, ”We're in a very robust, strong period of (economic) growth” which will increase gasoline demand and keep prices high.

The EIA earlier this week said the average price was $1.78 last week. The EIA forecast the average price nationwide would be $1.81 for the second quarter and then decline to an average of $1.76 in the third quarter.

But Caruso warned that prices could be substantially higher in some parts of the country and that unforeseen problems with refineries or pipelines could cause price spikes.

He said the agency was ”watching closely” the gasoline supply situation in the Northeast, where gasoline imports are critical in meeting demand.

The MTBE ban in the region will require greater use of another additive, ethanol, and it's uncertain whether or not these requirements will reduce the amount of gasoline that will be available from imports.

Separately, the EIA analysis predicted that crude oil prices will average about $33 a barrel throughout the year and that natural gas prices this summer will be about $5 per thousand cubic feet.

The agency also predicted that despite high gasoline prices, motorists will be traveling more this summer than last. The EIA projected gasoline demand will average 9.32 million barrels a day this summer, a record high.