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March 17, 2008: Record Oil Prices Causing Gasoline Price Spike

March 17, 2008
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WASHINGTON - Crude oil prices are at record highs and are being felt at the pump, with the national average price of regular gasoline expected to peak at $3.50 per gallon this spring, according to a new report from the U.S. Department of Energy’s (DOE’s) Energy Information Administration (EIA).

The EIA’s Short-Term Energy Outlook notes that the spot price of crude oil is expected to average $102 per barrel for the month of March, up from an average of $95 per barrel in February. As a result, some areas of the country may experience short-term peaks in regular gasoline prices exceeding $4 per gallon, while the price of gasoline for the year as a whole is expected to average $3.21 per gallon. Diesel fuel prices will be even higher, averaging $3.70 per gallon for March and April and $3.45 per gallon for the full year.

The EIA expects the higher prices to have a direct impact on petroleum consumption in the United States. The total U.S. consumption of liquid fuels and petroleum products averaged 20.7 million barrels per day in 2007, but is projected to increase by only 40,000 barrels per day in 2008. With the rapid increase in ethanol production to meet the new national Renewable Fuel Standard, the growth in liquid fuel consumption will be exceeded by the growth in ethanol production, causing U.S. petroleum consumption to drop by 90,000 barrels per day. For the world as a whole, however, petroleum consumption is projected to increase by 1.3 million barrels per day by the end of 2008. The EIA expects industrialized countries to increase their demand by only 200,000 barrels per day this year, while the bulk of the demand growth will occur in China, India, the Middle East oil-producing countries, and other Asian countries.

Publication date: 03/17/2008

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