Economy worries may slow gas price rise

By Tom Doggett

WASHINGTON (Reuters) - U.S. consumers will pay more for gasoline in the weeks ahead as fuel demand picks up going into the spring driving season, but a slowing economy may keep pump prices from rising as much as normal, energy experts said on Monday.

The government says motor fuel costs have soared 31 cents over the past month to $2.51 a gallon because of the rise in crude oil prices, which accounts for half the cost of making gasoline. Most of those higher crude prices have been passed on to consumers at the pump.

Pushing up gasoline prices in the weeks ahead will be stronger fuel use as highway travel gets a spring boost.

"Fuel demand increases, that puts upward pressure on prices," said Tancred Lidderdale, an analyst with the U.S. Energy Information Administration, the Energy Department's analytical arm.

Refineries will also switch to less-polluting gasoline required by the government during warmer months, which costs more to make and adds five to seven cents at the pump, according to Lidderdale.

The EIA will revise up its estimate of $2.41 a gallon for the average gasoline price for the second quarter when the agency releases its new monthly forecast on Tuesday, he said.

But the recent steep fall in the U.S. stock market and more concerns about the health of the American economy could dampen the rise in gasoline prices if consumers start cutting back on their driving and petroleum demand weakens, said Geoff Sundstrom, a spokesman for the AAA travel group.

"Consumers are much more likely to reduce their consumption of fuel on the basis of economic anxiety, than they are based on the price of the product," Sundstrom said.