EIA: Gas Prices to Hit Record $2.15 in Spring

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U.S. retail gasoline prices (search) will hit a record high this spring, reaching a national monthly average of $2.15 a gallon due mostly to soaring crude oil prices, the government said Tuesday.

During the busy 2005 driving season of April through September, gasoline will average $2.10 a gallon, up 20 cents from the same period last year, the Energy Information Administration (search) said in its monthly energy forecast.

This spring, the monthly retail price is forecast to average $2.15 per gallon but U.S. drivers may face pump prices higher than that on a weekly basis, said analyst Dave Costello. He declined to speculate how high the retail gasoline price could climb in areas such as California, which usually has some of most expensive gasoline in the nation.

"Higher prices... into May or June seem pretty likely to us," Costello said.

The record average nationwide price is $2.06 a gallon set last May. However, when adjusted for inflation in today's dollars, the highest U.S. price was $3.08 a gallon in March 1981, according to the Energy Department's analytical arm.

U.S. gasoline prices rank among the lowest in the world for industrialized countries.

The current average pump price for regular unleaded fuel is $2 a gallon, the EIA said. That represents a climb of nearly 22 cents a gallon since the beginning of the year.

The upward march in fuel prices reflects crude oil costs.

Crude oil prices have been above $50 a barrel for several weeks. On Tuesday, crude oil futures briefly hit $55.15 in trading at the New York Mercantile Exchange (search) before last trading at $54.60 a barrel, up 71 cents.

While U.S. lawmakers have complained rising fuel prices hurt families, Costello said it was unclear how high gasoline prices must climb before motorists cut down on driving.

"I don't think there's a particular number. When the increase is pretty rapid, it does seem to have an impact (on demand)," Costello said.

In addition to crude oil costs, strong demand is also pushing up motor fuel prices, the EIA said.

The EIA revised up its estimate of U.S. gasoline demand for April through June by 30,000 barrels per day to 9.33 million barrels per day.

Despite higher gasoline inventories, the number of days that motor fuel stocks could meet demand has been falling because of strong consumption, which the EIA said suggests "increasing short-term tightness for gasoline markets."

The EIA estimates that a 10 percent increase in the price of oil could lower the U.S. economic growth rate by between 0.05 and 0.1 percentage points.

U.S. Treasury Secretary John Snow (search) said last weekend that energy prices are "way too high" and act like a tax on the economy.

Democratic Sen. Ron Wyden of Oregon Monday urged the Bush administration to lobby OPEC harder to lower oil and gasoline prices, which he said have "clobbered" consumers.

"OPEC is going to look out for OPEC. The question is whether this administration is going to stand up for the American consumer," Wyden said in a Senate floor speech. "I don't think it's right to let OPEC run roughshod over the American consumer."

The Organization of Petroleum Exporting Countries (search) meets March 16 to discuss oil production policy.