Summer gasoline use to drop for the first time since 1991

Posted by Oil Tycoon

April 7, 2008

WASHINGTON (Reuters) - Record-high gasoline prices will reduce U.S. demand for the fuel this summer by 85,000 barrels per day compared with last summer, the first drop in summer motor fuel consumption since 1991, the government’s top energy forecaster said on Monday.

“We see a slowdown in gasoline demand,” Guy Caruso, head of the federal Energy Information Administration, told reporters. “We are for the first in a long time actually looking at a lower demand for gasoline this summer than last summer.”

Summer gasoline consumption is forecast to decline 0.9 percent, less than 1991’s summer drop of 1.1 percent, but certainly opposite of the 1.5 percent growth the U.S. normally sees in gasoline demand, according to an EIA official.

Caruso was reluctant to expand on the EIA’s revised estimates, saying the agency will release on Tuesday its official summer gasoline forecast.

Caruso said the agency will upwardly revise its forecast for the peak price that consumers will pay for gasoline this summer to above $3.60 a gallon. He said the EIA still does not believe the average pump price will hit $4 a gallon on a national basis, though it will reach that level in some parts of the country.

The national price for regular, self-service gasoline jumped 4.2 cents over the last week to set a new record of $3.33 a gallon, up 53 cents from a year ago, the EIA said on Monday its weekly survey of service stations.

Separately, Caruso said OPEC needs to pump more oil supplies to help lower crude prices that are above $100 a barrel. “We think the market is still very tight,” he said. “We’re calling for more OPEC oil in the first half of 2008.”

OPEC Secretary-General Abdullah al-Badri said over the weekend that there was plenty of oil in the market and OPEC does not need to increase its output levels.

Badri blamed high crude prices on a weak U.S. dollar, a shortage of refining capacity and geopolitical tensions in major oil producing countries.

Caruso said some of those factors mentioned by Badri are contributing to the volatility in oil prices, “but not to the level, the sharp rise” that crude costs have soared.

(Reporting by Tom Doggett; Editing by Marguerita Choy)

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