Q: How much higher will the price of gasoline go this summer?
A: Energy-price predictions are often about as reliable as weather forecasts. Yet just as sure as summer brings thunderstorms, so too have motorists come to expect higher costs at the pump.
Now, with the crude futures trading at close to $60 a barrel on the New York Mercantile Exchange, analysts say the retail price of gasoline, which averages $2.22 a gallon nationwide, could be poised to reach new highs, even if a pullback happens first.
"It's all a function of how high crude oil goes," said Tom Bentz, a broker at BNP Paribas Commodity Futures in New York.
Crude prices have been pushed higher by a combination of factors: strong demand, limited production and refining capacity, violence in Iraq, labor strife in Nigeria and speculation by oil traders.
In the past year, crude oil futures have risen by about 65 percent, while gasoline futures have climbed by almost 45 percent.
While a dip in prices is customary after the July 4 holiday weekend, analysts said any backtracking is likely to be short-lived and that costs will most likely rise once again before the summer's over.
"This year I don't expect to see as much of a correction, though I still anticipate a little relief," said Phil Flynn, an analyst at Alaron Trading Corp. in Chicago.
"People complain about high prices but they don't do anything about it," Flynn added. "Gas prices will continue to stay strong as long as demand hangs in there."
The Energy Department said last week that daily gasoline demand averaged 9.4 million barrels over the past month, an increase of 2.5 percent from the same period a year ago.
Demand for distillate fuel, which includes diesel and jet fuel, was up by 7 percent at 4.1 million barrels a day and that has kept added pressure on refiners.
While analysts generally believe that the country has an ample supply of gasoline to meet summer demand, they are increasingly worried that inventories of distillate fuel will not be sufficient to meet increased consumption later this year.
As the summer wears on and traders turn their attention to winter heating oil supplies, any sign that refiners are not cranking out enough distillate is likely to further fray traders' nerves and send crude oil prices higher. And when that happens, the price of gasoline can't be too far behind.
"Today's prices may feel cheap come the fourth quarter," Flynn said.
Analyst Tom Kloza at Oil Price Information Service in Wall, N.J., said "there is a 50-50 chance that prices will surpass their all-time April 11 highs between Aug 1 and October 15."
The average retail price of gasoline was $2.28 a gallon on April 11, according to the Energy Department.
"A lot will depend upon tropical storm tracks or possible power outages and other events that impact refineries," Kloza said. "If refineries run without incident, we'll be fine."
The Energy Department said earlier this month that it expects gasoline prices to average $2.17 per gallon this summer, which would be an increase of 26 cents from a year earlier.
On the Net:
U.S Energy Information Administration: http://eia.doe.gov