The Energy Department said Wednesday it expects gasoline prices to peak in August at about $4.15 on average- a dime more than today. That might be encouraging for people who are beginning to think prices will keep climbing forever.
But wait: There won’t be much relief. The government estimates that prices at the pump could stay near that level the rest of this year – and next.
Oh, and the government tends to err on the optimistic side.
Guy Caruso, head of the federal Energy Information Administration, delivered the sober news Wednesday 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. By the end of the day the market seemed ready to set new records above $140 a barrel.
A drop in gasoline inventories, concerns about hurricanes that could disrupt Gulf of Mexico supplies, and – most importantly – 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.
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.
Crude oil prices are expected to average $126 a barrel in 2009, or $4 a barrel higher than this year, as oil supplies and demand will remain tight, Caruso told the House Select Committee on Energy Independence and Global Warming.
“The consensus view,” said Rep. Edward Markey, D-Mass., the committee’s chairman, “is that oil above $100 a barrel is going to be with us for some time.”
The Energy Department’s statistical agency projects oil prices declining to $86 a barrel in 2010 but then increasing to $107 by 2015. Markey said he doubted those numbers and noted that EIA projections in the past have been overly optimistic when it comes to energy prices.
Predicting future oil and gasoline prices is highly uncertain with the volatile global oil markets, Caruso acknowledged.
His agency bases its gasoline projections on assumptions of future oil prices, expectations of demand and economic trends. It has revised its figures upward several times since last fall – not having anticipated the huge surge in global oil costs.