WASHINGTON – U.S. retail gasoline prices may continue to rise for the next few weeks, and then begin to level off in late January or early February, the government's top energy forecasting agency said on Wednesday.
The federal Energy Information Administration said strong gasoline demand during December may be the biggest factor behind the recent jump in gasoline prices, which climbed 8.9 cents over the past week to a national average of $2.33 a gallon on Monday, up 53 cents from a year ago.
"For now, it does not appear that retail gasoline prices will average below $2 per gallon anytime soon, but barring a bumpy transition to the new gasoline formulations taking place this year or a major supply disruption, nor do we expect to see $3 per gallon either," the EIA said in a weekly review of the oil market.
Gasoline demand picked up sharply in December after showing very little growth during the autumn when pump prices hit a record $3.07 a gallon in early September when Hurricane Katrina disrupted fuel supplies, the agency said.
Gasoline prices then fell, rose again in October after Hurricane Rita struck, then declined in the following weeks to $2.15 a gallon in early December.
Gasoline imports slowed after fuel prices dropped and refineries started to produce more distillate fuel for the winter. As a result finished gasoline inventories in December fell by nearly 2 million barrels, compared to stocks increasing by almost 5 million barrels in the same month a year earlier.
With gasoline inventories relatively low, wholesale gasoline prices increased, "which eventually found its way to higher retail prices" for consumers, the EIA said.