U.S. gasoline and diesel prices probably peaked in May and should be slightly lower than previously forecast over the summer as refinery operations recover from Mississippi River flooding disruptions, the U.S. Energy Department said.
Regular-grade gasoline at the pump is expected to average $3.75 a gallon nationwide from April through September, down 6 cents from last month’s projection, according to the Energy Department’s monthly Short-Term Energy Outlook , released June 7. Retail diesel is forecast to average $3.97 a gallon over the summer, down 3 cents from last month’s estimate.
Flooding in Louisiana and other areas along the Mississippi River earlier this spring led to temporary refinery shutdowns, contributing to higher fuel prices. Unexpected refinery shutdowns also led to a drop in gasoline supplies on the East Coast, the Energy Department said.
“In recent weeks, gasoline prices have been falling… as the refinery situation has begun to recover,” according to the report. As a result, the department expects the U.S. retail gasoline average during May, at $3.91, will be the peak monthly average for the 2011 driving season.
Gasoline and diesel prices also declined as crude oil fell from near three-year highs, providing some relief to farmers, truckers and others. Still, oil prices are expected to remain high amid growing global consumption and the potential for supply disruptions in the Middle East. That’s expected to keep fuel prices in the U.S. above last year’s levels.
Projected U.S. gasoline prices over the summer driving season, at $3.75 a gallon, would still be up 36% from $2.76 during the same period in 2010, the Energy Department said. Projected diesel prices would be up 33% from last year.
The Energy Department “still expects oil markets to tighten as growing liquid fuels demand in the emerging economies and slowing growth in non-OPEC supply maintain upward pressure on oil prices,” the report said.
U.S. benchmark oil prices should average $102 a barrel in 2011 and $107 in 2012, up from $79 last year, the department said.
In afternoon trading June 7, crude futures in New York traded around $99.25 a barrel, up 8.6% since the end of 2010 but down from a peak of nearly $115 in early May.