Report: High Gas Prices to Impact U.S. Travel
Retail gas prices will peak near $3.60 a gallon in June, but prices at such lofty levels will make many Americans think twice about hitting the road this summer, the Energy Department said Tuesday (April 8).
High prices and a weak economy are expected to cut demand for gasoline by about 0.4% during the peak summer driving season, the department's Energy Information Administration said in a monthly report on petroleum supplies and demand.
As reported by the Associated Press, overall consumption of petroleum products will drop by 90,000 barrels a day this year. Previously, the EIA had projected petroleum consumption would rise by 40,000 barrels a day.
The government had previously estimated that gas prices would peak near $3.50 a gallon. Many analysts predict prices will rise higher than the EIA's latest estimate, and approach $4 a gallon.
On Tuesday, gas prices slipped slightly to a national average of $3.331 a gallon from Monday's record of $3.339, according to AAA and the Oil Price Information Service. Prices are 55 cents higher than a year ago.
Diesel prices, which are already averaging more than $4 a gallon nationwide, will average $3.62 a gallon this year, up 74 cents from 2007, the EIA said. Diesel fuel is used to transport the vast majority of the world's food, consumer and industrial products. High diesel prices are one of the reasons food prices are soaring.
Crude oil prices are the biggest reason gas and diesel prices are rising, the EIA said. Oil is now expected to average $101 a barrel this year, up from the EIA's previous projection of $94. Next year, the EIA expects oil to average $92.50 a barrel, up from a previous projection of $86.
While high prices are damping demand in the U.S., petroleum consumption remains strong in China, India, Russia and the Middle East, the EIA said.
"The combination of rising world oil consumption and low surplus production capacity is putting upward pressure on oil prices," the EIA report said. "The flow of investment money into commodities has contributed to crude oil price volatility."