U.S. drivers face $3.50 gasoline this spring--gov't
08 Jan 2008 18:56:33 GMT Source: Reuters
By Tom Doggett WASHINGTON, Jan 8 (Reuters) - U.S. consumers will pay record prices for gasoline this spring, with national monthly pump costs peaking near $3.50 per gallon when the busy driving season begins, the government's top energy forecasting agency said Tuesday. Higher crude oil prices, which last week topped a record $100 a barrel, are pushing up motor fuel costs, the Energy Information Administration said in its new monthly forecast. The price of crude oil now accounts for about two-thirds of the cost of making gasoline, according to the Energy Department's analytical arm. Tight supplies caused by global oil demand growing faster than new oil production is behind higher petroleum costs. And consumers should not expect a break any time soon. "Global oil markets will likely remain tight through 2008, then ease moderately in 2009," the EIA said. "Both motor gasoline and diesel prices are projected to average over $3 per gallon in 2008 and 2009, with monthly average gasoline prices peaking near $3.50 per gallon this spring." The national price for gasoline jumped 5.6 cents over the last week alone and now stands at $3.11 a gallon, up 80 cents from a year ago. High gasoline prices are cutting into consumer spending and raising business expenses, hurting a U.S. economy that is already suffering a slowdown. The pain at the pump has also become an issue in this year's U.S. presidential election, with both Democratic and Republican candidates telling voters they know family budgets are being pinched and laying out their energy policies to tackle the problem. U.S. gasoline use during the first half of this year will be higher than a year ago, but rising pump prices will reduce motor fuel demand growth by 20,000 barrels a day in the current quarter and by 10,000 barrels a day in the second quarter, the EIA said. (Editing by Russell Blinch)
