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NEW YORK -- Consumers are being told to brace for higher gasoline prices this summer as the price of crude oil combines with tightened gas supplies in the coming months.
Government efforts to stimulate the economy fueled expectations that a recovery might materialize sooner than anticipated, lifting oil-future prices earlier this week above $53 a barrel—a level not seen since November, according to The Wall Street Journal.
Despite a growing glut of crude-oil supplies, crude prices retreated only $1.21 to $52.77 a barrel on the New York Mercantile Exchange. That is still 18 percent higher than at the beginning of the month, said the Journal. With weak demand, crude inventories rose 3.3 million barrels to 356.6 million barrels last week, the highest in more than a decade, according to a Department of Energy report.
Meanwhile, gasoline futures dropped 0.76 cent to $1.4950 a gallon.
According to the Journal, refiners continue to cut back production in response to lagging demand for fuel, as gasoline stockpiles fell 1.1 million barrels to 214.6 million barrels the week earlier. But, with signs that demand is picking up, prices could be in for a rise. Last week, gasoline demand rose by a four-week average of 0.7 percent, according to the government report.
Analysts interviewed by the Journal expect gasoline consumption grow even more in coming months. With gas prices well below $3 a gallon, Geoff Sundstrom, spokesman for auto club AAA, is expecting more consumers to take automobile vacations this summer.
In the past week, gasoline prices rose nearly 7 cents to a national average of $1.986 a regular gallon, according to AAA. In addition, prices typically go up in the summer as reformulated gasoline (RFG) replaces winter blends at the pump. RFG is gas supplemented with fuel oxygenates like ethanol and methanol that burn cleaner in the heat of summer.
However, few analysts are predicting that gas prices will rise anywhere near last year’s record levels because demand is still down due to the recessionary economy. The AAA is expecting an average of between $2 and $2.50 a gallon, according to The Journal.
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