WASHINGTON – Demand this summer for U.S. gasoline will rise 1.8 percent from last summer, helping push pump prices to a peak monthly average of $2.35 a gallon in May, the federal government said Thursday.
American drivers will consume an average 9.331 million barrels per day of gasoline this summer, according to the Energy Information Administration (search). The forecast from the Energy Department's (search) analytical arm is for the busy summer driving season running from April through September. Memorial Day weekend in late May ushers in the peak driving season.
The expected growth in summer gasoline demand would be above the five-year average, the agency said.
"We're looking at a global crude market that is straining" to meet world demand, said EIA administrator Guy Caruso.
U.S. crude oil prices rose on the heels of the government's new forecast. On the New York Mercantile Exchange (search), crude oil futures for May delivery peaked at $56.59 a barrel for a 64-cent gain before some quick profit-taking trimmed the rise.
In its report, the EIA also raised its estimate of China's oil demand in the second quarter by 1.4 percent to 7.4 million bpd. China's runaway growth in oil consumption surprised oil market analysts last year, and is expected to rise by 12 percent in 2005.
The higher demand for U.S. gasoline "is caused by the increasing number of drivers and vehicles, and increasing miles traveled per vehicle," the EIA said. A flat to declining fuel efficiency in the entire U.S. vehicle fleet is also a factor.
With no slowdown in U.S. gasoline demand, refiners will have to import more this summer, the EIA said.
U.S. refiners' summer production of gasoline will average 8.382 million bpd, up 0.5 percent from last year. But that slight increase cannot keep up with demand growth "due to limited growth in refinery capacity," the EIA said.
Imports will have to make up the difference to meet demand. This summer's net imports of motor gasoline and blending components are projected to average a record 893,000 bpd, up 4.7 percent from last year.
But those foreign supplies "may be harder to obtain than in previous summers and are expected to be costly," the EIA said.
The House Energy and Commerce Committee (search) began drafting an energy bill this week that would clear away some environmental restrictions so that mothballed U.S. refineries could be restarted or new ones built. On Wednesday, the panel voted to expand U.S. daylight-saving time by two months to help reduce energy consumption.
The Senate has yet to begin work on its version of an energy bill. However, neither the Senate or House bill would no short-term effect on lower gasoline prices.
While gasoline prices should peak in May, the nationwide price for the summer should average $2.29 a gallon, up 38 cents from last year, and not far from this week's $2.22 a gallon. When adjusted for inflation, the most expensive U.S. gasoline was in March 1981 at $3.12 a gallon, the EIA said.
Rising crude oil prices are pushing up pump costs. The price for U.S. crude should average $56.62 a barrel this summer, compared to $41.12 for the same period last year.
The EIA said it expects crude costs to stay above $50 a barrel for the rest of 2005 and 2006.
U.S. crude oil futures traded at a record high of $58.28 per barrel on Monday after a Goldman Sachs analyst last week forecast prices could spike to $105 per barrel.
However, Caruso dismissed that forecast, saying that such a high price was unrealistic.