Report: Chance of $4 gas again next summer

By Thomas V. Bona

BusinessRockford.com

We could see $4-a-gallon gasoline again next summer.

The U.S. Energy Information Administration said today gas could average $3.66 a gallon nationally next month, then start another upswing. Gas could peak at $3.98 a gallon nationally in June, which would likely mean prices topping $4 in Illinois.

“We can be thankful that prices have come down ... but they’re pretty much bottoming out,” said EIA economist Neil Gamson. “A more optimistic forecast for economic growth (worldwide) and supply not growing quite as fast are our main reasons.”

That said, the future of oil and gas prices depends on three very volatile factors — the global economy, global demand for petroleum products and OPEC’s impending decision whether to cut oil production.

Jim Ritterbusch, president of Galena-based oil trading advisory firm Ritterbusch & Associates, thinks those will break more positively for consumers. He said today he expects oil to soon dip to $90 to $100 a barrel and gas prices to reach $3.10 to $3.25 a gallon nationally before stabilizing.

“This weak demand theme is going to be around for a while,” he said. “We’re looking at pretty hefty declines — a 3 percent drop in 2008 versus 2007 in the U.S. ... They’re still anticipating growth globally, but those expected increases have been shaved as well.”

He thinks OPEC will keep oil production at current levels but, even if they do cut output, other countries will pick up the slack to gain market share.

Oil prices closed below $104 a barrel today for the first time since early April as traders bet that Hurricane Ike would miss critical Gulf Coast oil installations and OPEC’s president signaled the cartel wouldn’t cut production.

Oil prices averaged $116 a barrel for the year as of the end of August. The EIA predicts oil could average $126 a barrel in 2009.

The EIA, in its monthly short-term energy outlook, did say gas would dip more than previously projected. Last month, it had predicted gas would bottom out at slightly less than $3.77 a gallon in October. In general, it revised its projections for the rest of the year down 10 cents a gallon, while predicting a bigger upswing next year.

Gas prices in the Rockford metro area averaged $3.77 a gallon this morning, according to AAA’s fuelgaugereport.com. It’s the second-highest average in Illinois, behind only the Chicago area. The Illinois average was $3.83 a gallon, making it tied for the seventh-highest state in the country. The national average was $3.65 a gallon.

Diesel prices are projected to bottom out at slightly less than $4.09 a gallon nationally next month, followed by a steady increase to $4.39 a gallon next May. The diesel price peak was $4.68 a gallon in June.

Diesel prices averaged $4.14 a gallon in Rockford this morning, the seventh-highest average in the state. The Illinois average was $4.30 a gallon, the 15th-highest average in the country. The national average was $4.22 a gallon.

The Associated Press contributed to this report.

Reach staff writer Thomas V. Bona at 815-987-1343 or tbona@rrstar.com.

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Blame Hurricane Ike for recent price hike

Gas prices surged to $3.95 a gallon in Rockford today, a day after wholesale gasoline prices jumped more than 20 cents in the Chicago and Gulf Coast regions.

“Hurricane Ike was the primary driver for cash gains through the middle of the country, along with lingering problems from a power outage at the ConocoPhillips Wood River, Ill., refinery,” Oil Price Information Service editor Jessica Nesterak said.

Retail prices may come back down, however, because wholesale prices dropped when Ike appeared poised to miss most oil infrastructure, OPIS reported.

 

 

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