08 March 2011 20:11 [Source: ICIS news]
WASHINGTON (ICIS)--US retail gasoline prices could shoot past $4/gal within months, the Energy Department said on Tuesday, as the ?xml:namespace>
In its monthly short-term energy outlook (STEO), the department’s Energy Information Administration (EIA) noted that prices for the benchmark US West Texas Intermediate (WTI) “have risen about $15 per barrel since mid-February in response to the disruption of crude oil exports from
“Continuing unrest in
As a result, the EIA said it was raising its forecast for the full-year average cost of WTI to $102/bbl, an increase of $9 since the administration’s prediction in early February.
Including crude supplies other than WTI, the department said it was raising its forecast for the cost of oil to refiners to $105/bbl on average for this year, an increase of $14/bbl from its month-earlier outlook.
As a consequence of the spike in crude prices, the administration said it was also raising its forecasts for gasoline costs at the retail level.
The EIA said it expects the retail price of regular-grade gasoline to average $3.56/gal for full-year 2011, an increase of 40 cents/gal from the administration’s forecast made just 30 days ago.
If the average retail gasoline price for all of 2011 were to hold at $3.56/gal, that level would be 77 cents/gal higher than the 2010 average price at the pump.
But the EIA suggested that its $3.56/gal average price forecast for this year might not stand.
“EIA projects gasoline prices to average about $3.70 per gallon during the peak driving season (April through September) with considerable regional and local variation.”
“There is also significant uncertainty surrounding the forecast,” the administration added.
“Current market prices of futures and options contracts for gasoline are suggesting a 25% probability that the national monthly average retail price for regular gasoline could exceed $4.00 per gallon during summer 2011,” the EIA said.
If the US national average for gasoline at the pump were to exceed $4/gal, some regions of the country could experience prices closer to $4.30/gal or higher as local prices can vary by as much as 30 cents/gal in either direction from the national average.
A $4/gal retail price for gasoline is considered the behaviour break point for consumers because at that level many will begin to drive less, and/or spend less on discretionary items such as recreation, dining, shopping and entertainment in order to cover their fuel costs.
Those shifts in consumer spending in turn could impact overall
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Paul Hodges studies key influencers shaping the chemical industry in Chemicals and the Economy
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