Record gasoline prices predicted for April

www.sfgate.com H. JOSEF HEBERT, Associated Press Writer Thursday, March 6, 2003
(03-06) 16:35 PST WASHINGTON (AP) --

Gasoline prices are expected to continue their upward climb and reach a record national average of $1.76 a gallon in April, the Energy Department forecast Thursday.

It predicted gas prices will average about $1.70 a gallon for regular brands through the summer driving season.

Gasoline prices have soared during the past month because of high crude oil costs, heavy demand for heating oil and tight inventories of crude as well as most petroleum products.

Already many parts of the country have been paying $2 or more at the pump. This week prices soared on the West Coast, where refining problems added to the price spike.

Gasoline prices increased to an average of $1.68 a gallon nationally this week, a hike of nearly 3 cents from last week and 54 cents higher than a year ago. Prices on the West Coast took the biggest jump, increasing by 8.5 cents to $1.93 a gallon, according to the Energy Information Administration.

"With the driving season beginning next month, pump prices are expected to continue to rise," said the EIA in a short-term energy forecast released Thursday.

The EIA said gasoline inventories remained tight, close to the lower end of the five-year average. This "is one of the reasons current pump prices are high," said the EIA, the department's statistical agency.

The $1.76 a gallon forecast for April would be a nickel more per gallon than the record high of $1.71 set in May 2001, said the agency.

These prices would still be somewhat of a bargain compared to gasoline costs in 1981 if inflation were taken into account, the EIA noted. Using today's dollar, motorists were paying the equivalent of $2.90 a gallon in March 1981, said the EIA.

The EIA said crude oil prices in February "moved higher than expected pushed by fears of war in Iraq, lower inventories (and) slow recovery of Venezuela's exports." The price of West Texas Intermediary, a benchmark crude, averaged $36 a barrel, a level not seen since October 1990, just months before the start of the Gulf War, the agency said.

Alluding to possible fighting in Iraq, the report said that "even without additional disruptions to world (oil) supply in the near term, prices are likely to remain on the high side and subject to substantial volatility through 2003."

Cold weather and tight supplies of both natural gas and heating oil caused residential heating bills to soar this winter.

The government estimated that if normal temperatures prevail through the end of this month, residential heating bills, compared with last year's cost, will be up by 30 percent for homes using natural gas, 60 percent for homes using oil, and 25 percent for homes using propane.

The cost of heating oil climbed to $1.83 cents a gallon this week, or 68 cents higher than a year ago, the government said. Propane increased to $1.72 a gallon, 60 cents more than a year ago. Natural gas prices have receded somewhat, but remained high.

On the Net:

Energy Information Administration: www.eia.doe.gov/