CNN April 8, 2003: 10:25 AM EDT

WASHINGTON (Reuters) - U.S. consumers will pay an average of 17 cents more a gallon for gasoline this summer compared to last year due to higher crude oil prices, low motor fuel stocks and record gasoline demand, the government said Tuesday.

But because of uncertainties in world oil markets due to the war in Iraq as well as with U.S. refinery and distribution systems, the Energy Information Administration warned that gasoline prices could be as much as 16 cents above or below the projected $1.56 per gallon summer average.

"High crude oil costs, low motor gasoline inventories and growing gasoline demand are factors contributing to high gasoline prices this year," the Energy Department's analytical arm said in its annual summer driving forecast.

The projected 17-cent increase for this summer's gasoline price is close to average summer prices in 2000 and 2001. However, it falls well short of the all-time summer high set in 1980 of $2.77 per gallon -- when adjusted for inflation and expressed in year 2003 dollars.

The price for oil accounts for about 40 percent of the cost of a gallon of gasoline.

While crude oil prices have fallen since the start of the war in Iraq, crude costs remain above levels from last year because of the disruption in Iraq's oil exports.

The disruption in Venezuela's oil production, a large part of which is exported to the United States, since December due to a workers strike also contributed to lower oil inventories and higher crude prices, EIA said.

U.S. gasoline inventories started the summer driving season at 200 million barrels, about 13 million barrels below the same time last year, which will make the United States more dependent on gasoline imports than in previous summers, according to EIA.

"The inventory situation is expected to worsen somewhat by the end of the current quarter as gasoline demand begins to increase," the agency said.

Gasoline demand is expected to increase 1.6 percent, or by 150,000 barrels per day (bpd), this summer driving season which runs April through September to a record 9.18 million bpd, EIA said.

U.S. summer gasoline production is forecast to increase 2.1 percent, or about 180,000 bpd, to 8.44 million bpd. To help meet demand, gasoline imports will have to make up the difference and are projected to average a record 746,000 bpd, up 1.9 percent or 14,000 bpd, according to EIA.

By Hil Anderson <a href=www.upi.com>UPI Chief Energy Correspondent From the National Desk Published 4/7/2003 6:17 PM

LOS ANGELES, April 7 (UPI) -- The coalition's military progress in Iraq kept oil prices on the run Monday despite OPEC's plans to meet later this month to discuss possible cuts in crude production in an effort to shore up prices.

May crude on the New York Mercantile Exchange fell 66 cents on the day to $27.96 per barrel after hovering slightly above $28 during the morning hours while traders digested reports that OPEC ministers would meet April 24 to presumably talk about the post-war supply situation and the winding down of the "war premium" that had pushed NYMEX to nearly $40 per barrel in February.

London crude fell 10 cents to $24.85 per barrel.

Crude also appeared to be influenced by NYMEX gasoline futures, which dipped 2.78 cents to 84.25 cents per gallon.

The downturn in futures prices should deflate retail gasoline prices somewhat in the United States as the annual summer increase in demand looms. The national average price for a gallon of regular at the pump Monday was $1.637, according to AAA, compared to $1.643 the previous day and $1.683 a month ago.

OPEC officials had little comment Monday on the Vienna meeting's agenda; however, ranking energy officials in the cartel's member nations have recently spoken of a "glut" of crude rather than any shortages caused by the war.

"Things have been very fragile, which is why we've seen the prices where they've been," Daniel Yergin, chairman of Cambridge Energy Research Associates, told the Los Angeles Times. "If there are no further disruptions of supply from other countries, then we'll see the supply-demand fundamentals improving week to week."

OPEC has increased its output this month to a combined 26.3 million barrels per day despite political and ethnic strife that cut production in Venezuela and Nigeria. Nigerian exports are expected to resume in the coming days while Venezuela has gradually returned to normal export levels.

In addition, U.S. and British officials are hoping that Iraq can begin exporting in the near future as well in order to help finance its post-war reconstruction.

Iraq's southern oil fields were seized largely intact by coalition forces early in the campaign and could begin producing this summer once repairs are completed.

The impact that Iraq's return to the market will have on short-term prices is still the subject of debate. Some analysts foresee the low oil inventories in the United States acting to support prices while others opine that the psychological impact that a flush market will have on traders will cause prices to fall further.