Gasoline to peak at $4.15/gallon in August

WASHINGTON (Reuters) - U.S. gasoline prices will continue to march to record highs this summer before peaking at $4.15 per gallon in August, the Energy Information Administration said on Tuesday.

Last month, the EIA projected gasoline prices would peak in June at $3.73 per gallon of regular grade fuel.

EIA also projected that gasoline, which averaged $2.81 per gallon last year, will average $3.78 per gallon in 2008, up more than 25 cents from last month's outlook.

"This forecast reflects a sizable narrowing of refiner gasoline margins from those of last year because of weakness in gasoline demand and growth in ethanol supply," the EIA said.

In 2009, gasoline prices were projected to average $3.92 per gallon, up 48 cents from the previous outlook.

Diesel prices were projected to average $4.32 per gallon this year and next, an increase of $1.44 per gallon over the 2007 average.

(Reporting by Russell Blinch; Editing by Walter Bagley)