Summer Gas Forecast At $1.46 A Gallon; Gas Tax To Stay

While EIA’s forecast dampened the prospect of $2.00 per gallon of regular grade gasoline even in high-price areas, as once feared, motorists still will be paying record amounts of about 25 percent more for gasoline this summer than last year. EIA’s forecast average $1.46 a gallon during the six-month summer driving season is 29 cents more than last year’s summer average and 11 cents higher than the 1981 record. The price is then predicted to drop to $1.39 a gallon by September, according to the EIA. Gasoline prices now average about $1.50 a gallon.

"We do see some relief for the consumer," said EIA administrator Jay Hakes. "Prices may have already peaked for the summer."

The Energy Department said its revised forecast takes into account the additional oil production announced by world producers last month. Gasoline prices already have dropped a bit in some places. Still, officials warned that the estimates are national averages and in some areas prices are likely to be higher.

Average gasoline prices in California in March, for example, have been 26 cents a gallon higher than the national average, with the disparity expected to continue into the summer, the report said.

The latest analysis by EIA was in sharp contrast to its forecast a month ago when the agency said that even with increased oil production, gasoline prices were expected to soar to a national average of $1.80 a gallon.

Gas Tax Rollback Denied
On Capitol Hill, meanwhile, the enthusiasm for giving motorists relief from high gasoline prices seemed to lose momentum. The Senate approved by a 66-34 vote a nonbinding resolution opposing a federal gas tax rollback of 4.3 cents per gallon. Rollback critics said it would give little help to consumers while depriving the government of billions of dollars needed for road projects. Still, Senate Majority Leader Trent Lott plans to push his gasoline tax cut bill next week.

The EIA forecast assumed that additional oil would begin hitting the U.S. market by May and June as a result of a decision March 28 by the Organization of Petroleum Exporting Countries to boost production by 1.7 million barrels a day. Other non-OPEC producers also would pump more oil.

"We are more optimistic today. Some of the tightening of the market has improved," said Hakes at a news conference.