WASHINGTON – White House economic adviser Ben Bernanke (search) said on Thursday U.S. gasoline prices will likely rise further because of system disruptions following Hurricane Katrina, but will drop when supply lines return to normal.
"There is a supply problem; there's been a reduction in the amount of gasoline available. People still want to drive, so the price is going to go up," Bernanke, chairman of President Bush's Council of Economic Advisers (search), said on C-SPAN television.
"I think the good news is that this is not likely to be a permanent situation as these refineries and these transportation networks are brought back on line," he said.
Gas prices should then return to levels seen earlier this year, Bernanke said. Gas prices were already high before the storm because of soaring global demand for oil, he said.
Meanwhile, oil prices have moved relatively little in the past week as a result of the hurricane, because the global supply and demand for oil was not much affected, Bernanke said.
"The amount of speculative activity is not that great and I'm fairly convinced that what's happening to prices is not much to do, or anything to do, with speculation. What it has to do with primarily is just the fundamental facts of supply and demand," he said in response to a viewer question.
Bernanke said there is not that much the United States can do about escalating global demand for energy except develop alternative sources of fuel.
"Higher oil prices, higher energy prices, make these alternatives economic," he said
Crude held near $69 on the New York Mercantile and gasoline rode high at over $100 a barrel on Thursday. U.S. crude was 14 cents lower at $68.80 a barrel, below the record $70.85 hit on Tuesday.
Gasoline futures on continued their relentless rise to a high of $2.465 a gallon.