U.S. consumers will face high gasoline prices this busy summer driving season and should expect to pay more than $2.50 a gallon at the pump, the government’s top energy forecasting agency said Wednesday.
High crude oil costs, which account for about half the cost of making gasoline, and strong demand for motor fuel as the weather gets warmer will push up pump prices, according to the federal Energy Information Administration.
“As people begin to take their vacations and their weekend trips during the spring and summer, gasoline demand inevitably increases,” the Energy Department’s analytical arm said in its weekly review of the oil market.
Gasoline consumption during the last four weeks has averaged over 9 million barrels per day, already up 2.5 percent from the same period last year, according to the EIA.
The national price for a gallon of regular unleaded gasoline soared almost eight cents over the last week to $2.33. Prices were up throughout the country, with the Midwest getting hit with the largest increase of 12 cents a gallon.
“With the first week of a sharp gasoline price increase already behind us, and with the first day of spring still nearly two weeks ahead, it does appear that gasoline consumers should prepare for higher gasoline prices this upcoming summer,” the EIA said.
Also pushing fuel prices higher this summer will be possible supply problems as refineries switch from using the water-polluting fuel additive MTBE in gasoline to ethanol, according to the agency.
The government in May will no longer require refineries to use in gasoline supplies oxygenates like MTBE, which has been banned in many states for polluting drinking water supplies. Some oil companies are being sued for using the additive.
Many refineries, worried they could be held liable, plan to stop using MTBE, known as methyl tertiary butyl ether, before the summer driving season begins and switch to clean-burning ethanol that is made mostly from corn.
“The transition away from MTBE-blended reformulated gasoline may give rise to local imbalances between supply and demand and associated price surges during the change,” the EIA said.
U.S. gasoline inventories fell for the first time in 10 weeks, but at almost 225 million barrels they are well above the upper end of the average range for this time of year, the agency said.