According to the just-released Short-Term Energy and Summer Fuels Outlook from the U.S. Energy Information Administration (EIA):
During the summer season the average monthly gasoline pump price is projected to peak at an average of $2.87 per gallon in May, compared with $2.98 per gallon last July. Retail regular grade motor gasoline prices are projected to average $2.81 per gallon this summer compared with $2.84 per gallon last summer.
No big change overall from last summer in gasoline prices is expected, in other words.
As far as overall world oil markets, they are being driven by a combination of lower inventories ("days of supply forward cover" "expected to decline to the low end of the normal range by the end of 2007"), relatively low spare production capacity (although higher than in recent years), strong world oil demand growth, "tepid non-OPEC supply growth," and geopolitical factors. According to EIA, "petroleum prices are subject to significant volatility, particularly when markets are tight and tensions in oil exporting nations deepen." In other words, keep an eye on world oil markets, including potential instability in the Middle East or hurricanes in the Gulf of Mexico. Either could cause oil prices to spike above forecasted levels.
