Gasoline Prices Expected to Decline, But Are Still Higher Than Last Year
By Heidi Taylor
WASHINGTON—There was some good news and some not-so-good news Tuesday as the Energy Information Administration announced its forecast for summer gasoline prices.
The good news: motorists may already have paid the highest prices for gas this year when the national average hit $1.73 per gallon in March.
The bad news: the national average price per gallon this summer is expected to be $1.56, nearly 20 cents more than it was last summer.
Still, the forecast from the Energy Information Administration was unexpectedly optimistic. Despite nationwide fears that the war in Iraq and the recent political turmoil in Venezuela would lead to gas shortages and price hikes, EIA officials said they expect gasoline prices to continue dropping throughout the summer.
With prices down to an average of $1.63 this week, officials forecast that gas would cost about the same amount this summer as it did in the summers of 2000 and 2001. The $1.56 per gallon average price forecast for this summer is nowhere near the record of $2.77 (adjusted for inflation) that motorists paid in the summer of 1980.
Guy Caruso, the EIA’s administrator, warned, however, that high crude oil costs, low motor gasoline inventories and growing demand-expected to increase by 1.6 percent this summer-mean gas prices may rise above those forecast. And some parts of the country are expected to see much higher prices. California may be hit particularly hard because it is implementing a ban on the gas additive MTBE, which was polluting groundwater, and replacing it with pricier ethanol, Caruso said.
“We’ve got an uphill battle to meet the inventory requirements,” Caruso said. He added that while he didn’t expect Iraq to resume oil exports for some months, other countries such as Saudi Arabia, Kuwait and the United Arab Emirates had increased their outputs, which was helping to hold down prices.
On a local level, Jeff Worthley, the economic development manger for the Cape Ann Chamber of Commerce, said that although he didn’t expect high gas prices to reduce tourism, visitors would have less money to spend on local activities and at local shops.
Worthley said that in the past five years, an average of 65,000 people visited Cape Ann each summer, regardless of gas prices. He added that after Sept. 11, 2001, many people prefer to drive rather than to fly.
“The impact of high gas prices is that people have $10 or $20 less in their pockets” once they get to Cape Ann, Worthley said, adding “so they have that much less to spend while they’re here.”
Published in The Newburyport Daily News, The Gloucester Daily News, and The Salem News in Massachusetts.
