Kingsport Times News Saturday, November 22, 2014
Business & Technology

Gas prices easing after springtime surge

April 10th, 2007 8:45 pm by Associated Press



WASHINGTON - Drivers may find gasoline a little cheaper this summer compared to last, despite a 64-cent-a-gallon jump since January.


The Energy Department said Tuesday that the recent sharp rise in gasoline costs is likely to slow in the coming weeks with prices averaging $2.81 a gallon over the vacation driving season, about 3 cents lower than last spring and summer.


But the Energy Information Administration forecast is anything but assured.


Only a month ago, the agency said it believed the cost of regular-grade gasoline would peak in June, averaging $2.67 for the month, a price already eclipsed last week.


The latest forecast calls for prices to peak with an average $2.87 a gallon for the month of May, then decline. Last summer's peak was an average of $2.98 for the month of July.


"We think the forecast is about on track," said Geoff Sundstrom, a spokesman for AAA. He said based on current market trends he doesn't see another summer of $3 gasoline nationwide.


Prices have soared beyond $3 in each of the last two summers: During Hurricane Katrina in 2005 that disrupted Gulf Coast supplies and last July when the Israeli invasion of Lebanon caused crude prices to spike to $76 a barrel with $3-plus gasoline quick to follow.


The forecast assumes no new international crisis this summer.


Since January, the price of regular grade gasoline has gone from a weekly average of $2.16 a gallon to $2.80 last week. Prices across much of the West Coast have been over $3 a gallon.


Gasoline prices normally increase in advance of the April-to-September heavy driving season, but this time the price climb came shockingly early - in the dead of winter.


The government attributed the unusual early price surge to higher crude oil prices, unplanned refinery outages, declining imports from Europe and an increase in demand.


"Although gasoline prices began their seasonal increase about a month earlier than usual, the rapid rate of price increase is projected to slow over the next few months," said the energy agency.


Despite the higher prices, motorists show no signs that they're staying off the roads.


The forecast said motorists are expected to use nearly 400 million gallons of gasoline from April to September, a 1.2 percent increase over the same months last year.


"Demand for fuel is strong. We've not seen a reduction in fuel use," said Sundstrom.


Nor have there been gasoline shortages as imports make up the shortfall in domestic refinery output.


The automobile association won't make its formal prediction of summer travel until next month. But Sundstrom said it appears that people seem to be adapting to the higher prices.


"One has to ponder if $3 a gallon is the new threshold to pain," said Sundstrom.


That may be the case among many vacationers, according to a survey of 2,518 owners of RVs, travel trailers, boats and motorcycles by Nationwide Mutual Insurance Co.


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