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Gas Price Increases Ahead

By Joe Benton
ConsumerAffairs.com

July 12, 2007

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Gas prices are likely to continue rising through the summer because of increased demand and tight supplies according to the U.S. Energy Information Agency.

The government agency predicts that retail gasoline prices will average $3 a gallon this month and climb to $3.07 in August.

"This is due to a combination of rising crude oil prices, strong demand for gasoline and low gasoline inventories," the analytical arm of the Energy Department said.

The average national price of a gallon of gas jumped 2.6 cents overnight to $3.02 a gallon, according to AAA. Prices have risen 7.7 cents over the last week after falling steadily from a late May peak of $3.23 a gallon.

Closure of a refinery in Coffeyville, Kansas because of flooding and the shutdown of oil processing equipment at a BP refinery in Whiting, Indiana have added upward pressure to the national average price of gasoline.

Low gasoline inventories are also causing upward price pressure at the pump, as fuel stocks are expected to remain tight through the rest of the summer, the government agency reported.

Gasoline inventories are forecast at 198 million barrels at the end of the summer driving season on September 30, 7 million barrels below the 5-year average and 17 million barrels lower than last year, the EIA said.

Stocks are low because many refineries are still off line for maintenance or unplanned outages.

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