Expect to pay at least $3 per gallon for gas soon, government says

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By John Nolan, Staff Writer Updated 8:25 PM Tuesday, March 9, 2010

Average gasoline prices likely will exceed $3 per gallon at times this spring and summer, as seasonal demand increases and as a projected economic recovery takes shape and encourages additional consumption, the government said Tuesday, March 9, in its latest short-term energy forecast.

The Energy Department’s Energy Information Administration projects that prices for regular-grade gasoline will average $2.84 per gallon this year and $2.96 per gallon in 2011. That would be up from the average of $2.35 per gallon in 2009.

According to the Web site www.DaytonGasPrices.com, the average price per gallon of regular unleaded gasoline in the Dayton area stood at $2.64 on Tuesday, compared with $2.76 nationally. That compared with $1.89 in Dayton and $1.93 nationally a year ago.

The government, using an updated forecast for global economic growth during 2010, projects that petroleum consumption will increase and push up the price of crude oil. The price of West Texas Intermediate crude oil — one benchmark tracked by the government — is forecast to exceed $80 per barrel this summer and rise to an average of $82 per barrel by year’s end, up from a low of $71.15 on Feb. 5.

The government projects a moderate increase in natural gas prices through 2011, as economic recovery pushes up demand for the fuel, including by utilities that burn it to generate electricity.

Spot prices at the Henry Hub, a market-watched point on the pipeline in Louisiana, are predicted to reach an annual average of $5.17 per thousand cubic feet this year, compared with the 2009 average of $4.06. The government projects an annual average in 2011 of $5.65, revised downward from the government’s January 2010 projection of $6.12.

High volumes of stored natural gas, the potential for increased domestic production and the likelihood of limited increase in consumption should help hold the line on prices for the fuel, the government said.

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