www.quicken.com Thursday, March 6, 2003 02:47 PM ET  Printer-friendly version   NEW YORK -- The U.S. Department of Energy's Energy Information Administration on Thursday cut its forecast for growth in U.S. oil demand by 15% to 500,000 barrels a day.

U.S. demand will grow this year by 90,000 barrels a day less than the EIA forecast last month. The drop came as the energy statistics agency cut its outlook for 2003 U.S. oil demand by 110,000 barrels, to 20.18 million barrels a day.

Some of the drop in the forecast for U.S. demand is accounted for by expectations that gasoline demand in the first quarter -- when weather has been poor and pump prices have spiked -- will be lower than originally thought. The EIA cut its forecast for first-quarter U.S. gasoline demand by 160,000 barrels, or 1.8%, to 8.58 million barrels daily.

A colder than normal winter in the U.S., particularly in the Northeast, has dragged on longer than expected and produced very strong demand for heating oil. The EIA raised its forecast for first-quarter demand for heating oil by 100,000 barrels to 4.29 million barrels a day.

The EIA expects broad growth in U.S. oil demand over the next two years, driven by an economic recovery and an increasingly tight natural gas market that will prompt consumers to switch fuels if possible.

The EIA expects growth in demand for all major petroleum products in 2003, in contrast to 2002, when gasoline demand was the one bright spot.

Demand for gasoline is expected to grow by 2.5% in 2003 and 2004, even as the strong increase in pump prices eats into drivers' disposable income. Demand for jet fuel is seen growing by 2.9% a year.

The EIA expects worldwide oil demand to grow by 1.1 million barrels a day this year, 100,000 barrels less than it expected last month. Demand for 2003 is forecast at 77.4 million barrels daily, 200,000 barrels less than expected in the last forecast.

Growth in demand, along with the ongoing disruption of supply from Venezuela and a looming war in Iraq, is expected to eat further into already depleted U.S. commercial oil inventories.

The EIA expects U.S. inventories of gasoline to end the second quarter at 202 million barrels, 10 million barrels less than it forecast last month, indicating it expects refiners to have trouble bulking up supplies ahead of the summer driving season. The agency expects gasoline inventories to end the first quarter at 198 million barrels, which implies a drop of eight million barrels from current levels during March.

The agency expects inventories of distillates, which include heating oil and diesel fuel, to end the first quarter at just 87 million barrels -- a figure that implies a drop of 9.5 million barrels in March. Last month, the EIA expected there would be 92 million barrels of distillates in inventory at the end of the first quarter.

The EIA also cut its expectations for growth in U.S. stocks of crude oil. Even if the situations in Venezuela and Iraq are resolved without further disruptions of supply, the industry will have trouble simultaneously rebuilding inventories of petroleum products and the crude oil from which they're made, the EIA said.

U.S. crude oil inventories will end the first quarter at 282 million barrels, down two million barrels from the last forecast, the EIA said. That figure implies 8.4 million barrels will be added to crude stocks this month.

The EIA cut its expectations for crude inventories at the end of the second quarter more sharply -- by eight million barrels, to 277 million barrels, a figure that implies growth of just 3.4 million barrels from current levels.

The agency expects the U.S. will end the year with just 278 million barrels of crude oil in stock -- barely more that what the agency considers the "lower operational level" needed to insulate the refinery system from supply shocks.

-Andrew Dowell, Dow Jones Newswires; 201-938-4430

www.news-journal.com H. JOSEF HEBERT Associated Press Writer

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.

On the Net:

Energy Information Administration: www.eia.doe.gov

www.napanews.com Thursday, March 6, 2003 From The Associated Press

SAN FRANCISCO -- San Francisco Bay area gas prices are breaking records and irritating motorists, and the price is not much lower in Southern California.

In San Francisco, regular unleaded fuel now costs an average of $2.19 a gallon, according to a survey by AAA of Northern California. In Oakland, gas averages $2.09 a gallon, and in San Jose it has hit $2.08.

Statewide, the average price is $2.04, beating the previous record of $2.03 set in May 2001.

The average price was a bit under $2.01 per gallon in the Los Angeles area and about a penny higher in Orange County. San Diego drivers were paying an average of nearly $2.04 per gallon.

Over the past year, the price for self-serve regular gas has jumped an average of 67.8 cents in California.

"It's ridiculous," said Sandra Cerrigan, who paid $2.23 for gas for her Land Rover at a San Francisco Chevron Station. "We're getting gouged."

Prices could rise even further for the summer driving season, which begins in March, said Sean Comey, AAA spokesman. He said gas prices are typically lower in winter.

California usually has higher gas prices than most other states because the state has higher fuel taxes and requires a special blend of lower-smog fuel. Nationally, gas prices averaged $1.68 Tuesday, according to AAA. The record is $1.72, set on May 15, 2001.

A spokeswoman for the American Petroleum Institute said the higher prices are determined by crude oil prices and other factors.

The price for crude oil almost reached a 12-year high last week at $36.70 a barrel. A potential war in Iraq, cold weather on the East Coast and a strike in Venezuela are blamed for pushing the price of a barrel that high.

"California gasoline prices have been rising steadily for the past nine and a half weeks and increases are likely to continue," Carol Thorp, spokeswoman for the Automobile Club of Southern California, said in a written statement. "The slow march to a possible war with Iraq has been the major factor in pushing up prices. Gas price reductions may be unlikely until the Iraq situation is resolved."

When taking into account inflation, current gas prices still are not as high as they were two decades ago, when they hit a peak after President Reagan deregulated gas prices.

"We have an open investigation, constantly, on gasoline prices and we have no evidence of there being illegal activities," state Attorney General Bill Lockyer said during a news conference Wednesday in Los Angeles.

He said the hikes appeared to be largely due to rising crude oil prices, war anxiety and an ongoing reduction of inventories by oil companies.

"The companies are holding less and less, and so that means they buy more expensive oil when they have to and it's driving up the price," he said.

Lockyer also said the oil market needs more competition.

"We don't see illegal manipulation. We do see the continuation of six companies that control 92 percent of the market," he said.

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/

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/