How high will summer gas prices go?

John W. Schoen Senior producer • Profile • E-mail

When government and industry analysts set up their forecasts for summer gasoline prices earlier this year, they predicted the seasonal surge would subside by this weekend — the mid-point of the summer driving season when demand for gasoline peaks. But the latest upturn in pump prices is one more sign that the recent run-up in energy prices is not seasonal, and that prices may be headed even higher from here.

Pump prices peaked in April at an average of $2.28 a gallon for regular and then began easing, falling to $2.05 a gallon by the Memorial Day weekend, according to the Energy Information Administration. Since then prices have climbed back to $2.22 a gallon, according the EIA.

When gas prices peaked in mid-April and supplies began to build, a number of forecasters expected prices to gradually ease through the rest of the summer. Gas prices began falling as the price of crude fell to $47 by mid-May. But since then a spike in crude prices above $60 a barrel has sent gasoline prices surging along with them. The price of crude contributes to about half the cost of a gallon of gasoline.

Despite the price rise, demand for gasoline remains strong. Last week, American motorists burned through 9.4 million barrels (or about 395 million gallons) of gasoline — up 2.5 percent from the same week a year ago.

Crude oil prices have backed off a few dollars from record highs, but are still sharply higher than they were a year ago, when oil traded in the mid-$30s. Despite recent assurances by OPEC ministers that the markets are adequately supplied with crude, prices have remained high.

And though the Senate recently approved a comprehensive energy bill, it won’t offer relief from high pump prices any time soon. The White House has said it is powerless to rein in prices or curb further increases.

“Unfortunately, there is very little that can be done in the short run to dramatically affect the price of oil,” said Treasury Secretary John Snow earlier this week.

Though higher pump prices are stretching consumers’ budgets, the added burden hasn’t been enough to cut into summer vacation plans, according to Justin McNaull, a spokesman for AAA in Washington, D.C. With pump prices about 70 cents higher than they were two years ago, the cost of the average 500-mile trip in a car that gets 25 miles to the gallon is up about $14, he said.

“For the cost of one large pizza most people aren’t going to squash their summer vacation plans,” said McNaull.

Popular travel destinations and tourist resorts have been offering free fill-ups to keep vacationers from canceling trips.

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