Summer gasoline use to drop 1st time since 1991
WASHINGTON (Reuters) - U.S. summer gasoline demand will shrink for the first time since 1991 as skyrocketing pump prices and the wider economic malaise hit holiday plans, the Energy Information Administration forecast on Tuesday.
With some regions seen facing the shock of $4 a gallon gasoline this summer, fuel demand could contract 0.4 percent from 2007 as cars and gas-guzzling SUVs spend more time in driveways and less on highways.
It would be the first decline in summer gasoline use since a recession choked the U.S. economy 17 years ago. Many analysts forecast that this year's housing crisis, credit crunch and high oil prices could cause an economic retraction.
"The economy did have a slight recession in 1991, so that's one similarity between that year and this (year)," said EIA administrator Guy Caruso. "We are projecting a small recession for the first half of the year," he said.
Meanwhile, several U.S. senators urged the Federal Trade Commission to prohibit manipulation in petroleum markets.
"Record energy prices and industry profits are coming at a time when supply and demand suggest that prices should be significantly lower," said Sen. Olympia Snowe, Republican of Maine.
Even though gasoline inventories hit a 15-year high on April 1, the EIA forecast record gasoline prices, citing expensive crude oil. The agency said crude should average $97 a barrel this summer, up $30 from last year.
Gasoline prices will peak in June at an average $3.62 a gallon, the EIA predicted, with an average of $3.54 for April-September, up 61 cents from the previous driving season.
Truckers also will feel the sting at the pumps, with diesel prices to average $3.73 a gallon this summer, up 88 cents from last year, after hitting a monthly peak of $3.91 in April.
CRUDE SUPPORTS
U.S crude shot to a record $111.80 a barrel in March as investors seeking to hedge against inflation rushed into commodities, helping to push retail gasoline prices to an all-time high of $3.33 a gallon this week.
The EIA now forecasts the price of oil -- which accounts for 70 percent the cost of making gasoline -- should average over $100 a barrel for 2008, and $103 in May and June.
Strong oil demand outside the United States should keep crude prices high this year, despite large fuel supplies and tepid demand in the world's top oil consumer, the agency said.
"The combination of rising world oil consumption and low surplus production capacity is putting upward pressure on oil prices," the EIA said.
In absolute terms, the EIA forecast that U.S. summer gasoline demand should slip to 9.404 million barrels per day during the first half of 2008, down 36,000 bpd from last year.
A U.S. economic turnaround in the second half should push annual growth to 1.2 percent for the year, still the lowest rate since 2001, the agency said.
Lower U.S. fuel demand should drag down gasoline imports this summer by 91,000 bpd to 1.074 million bpd against year ago levels, while domestic gasoline production should fall 20,000 bpd to 8.241 million bpd.
(Reporting by Tom Doggett; Editing by Matthew Robinson and Marguerita Choy)
