Gasoline Prices Headed Higher Record Summer Demand, Lower Stocks Contribute To Increase

Gasoline prices will be on average a nickel higher and supplies may be tighter this summer than a year ago as more Americans take to the road, the Energy Department said Friday.

While supplies are expected to be adequate, the government said this summer the gasoline market will be marked by “more uncertainty and complexity” than usual.

An expected record summer demand, lower stocks and introduction at the beginning of the year of a cleaner burning “reformulated” gasoline across about a third of the market, will complicate matters, said the Energy Information Administration.

In the Spokane area, prices are already escalating in response to a dispute over pipeline right-of-way across the Flathead Indian Reservation in Western Montana.

The Yellowstone Pipeline Co. has been forced to truck fuel around the bottleneck since last month.

Inland Automobile Association executive Ed Sharman said a spot check of gasoline prices this week indicated the result has been a six-cent increase to $1.17 per gallon.

Normally, he said, prices don’t move until the Memorial Day weekend.

The Energy Information Administration predicted that gasoline prices would average $1.24 a gallon nationwide through September, five cents higher than last summer. Less than half of the increase was attributed to the introduction of reformulated gasoline in areas with serious smog problems.

The higher prices are not expected to dampen demand, however.

“Buoyed by increases in real personal disposal income, highway travel activity is projected to be 2.8 percent higher than last year” with gasoline demand approaching 8 million barrels a day in the July-September period, a 17-year high, said the agency.

“Along with record demand, low pre-season inventories, high refinery utilization and reduced supply flexibility … add uncertainties to the summer (gasoline) outlook,” said the EIA, which is the statistical agency of the Energy Department.