Associated Press – Gas to peak at $4.15 a gallon but stay high

6/12/08

WASHINGTON -- Gasoline prices should peak at $4.15 a gallon this summer, the government says -- finally an encouraging word for motorists who might be thinking the cost of a fill-up will just keep climbing.

But wait: The predicted relief is pretty modest. Prices at the pump are likely to stay above $4 a gallon most of next year, according to Wednesday's projections by the Energy Department's statistical agency.

Oh, and the government tends to err on the optimistic side.

Guy Caruso, head of the federal Energy Information Administration, delivered the sober news at a congressional hearing on energy prices and the future of oil.

Even as he spoke, oil prices jumped again, edging for a time above $138 a barrel and putting yet more upward pressure on gasoline prices.

A drop in gasoline inventories, concerns about hurricanes that could disrupt Gulf of Mexico supplies, and most important the high oil prices all have contributed to a belief that the upward spiral of gasoline costs will continue at least for a few months, according to Caruso as well as private energy experts.

Motorists are paying $4.05 a gallon on average nationwide, and considerably more in some parts of the country, according to a survey of gas stations by AAA and the Oil Price Information Service. That's an increase of nearly $1 a gallon since January. In Utah on Wednesday, the statewide average price for a gallon of regular unleaded gas was $3.996 per gallon.

And little relief is in sight.

Prices are likely to remain close to or above $4 for the rest of the year and average $3.92 a gallon through 2009, the Energy Department agency forecast.

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