The U.S. government's top energy forecasting agency on Tuesday raised its estimate for summer retail gasoline prices by almost 10 cents a gallon due to tight supplies and problems at the nation's refineries.
Pump prices are expected to average $3.05 a gallon during the summer driving season that runs from April through September, the Energy Information Administration said in its monthly outlook, up from $2.95 in its previous forecast.
"The May average monthly gasoline pump price reached $3.15 per gallon and is expected to fall in June and July then rise again in August to $3.11," the Energy Department's analytical arm said.
The national price for regular gasoline fell 8 cents over the last week to $3.08 a gallon but is still up 91 cents since the beginning of the year, the agency said.
Despite high pump costs, motor fuel demand is expected to stay strong.
The EIA revised upward its forecast for growth in U.S. gasoline demand during the coming July-September period, with fuel consumption increasing by 103,000 barrels per day from a year earlier to an average 9.6 million bpd for the third quarter.
Highway miles traveled for the third quarter are forecast to increase 1.4 percent compared with a year earlier, the agency said.
After a prolonged stretch of refinery problems, the EIA lowered its forecast for U.S. summer refinery activity. Refiners are now expected to operate at 91.2 percent of capacity, down from the agency's prior estimate of 91.7 percent.
The lower refinery capacity translates into about 1 million barrels of total lost gasoline production on a monthly basis, according to the EIA.
Lower gasoline output from refineries will cut into available fuel supplies. "Motor gasoline inventories are projected to be tight during the summer season," the EIA said.
EIA analyst Tancred Lidderdale says refiners are taking longer to come back online from routine maintenance and unplanned outages because of labor costs and a shortage of experienced people to do the repair work.
"I see no evidence and I've got no reason to believe that [gasoline] production is being withheld. All we're seeing is continuing [refinery] disruptions that are going on for a number of months now," he said.
Some of the shortfall from domestic refiners could be made up from a projected increase in foreign gasoline imports. The EIA raised its forecast for summer gasoline imports to an average of 1.216 million bpd from 1.094 million bpd.
The cost of gas affects the revenues of companies, such as BP (down $0.11 to $67.08, Charts), Exxon Mobile (down $0.68 to $82.38, Charts, Fortune 500), Chevron (down $0.45 to $80.90, Charts, Fortune 500) and ConocoPhillips (down $0.44 to $77.43, Charts, Fortune 500).
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