EIA Projects Gasoline Prices to Rise; Diesel May Drop Slightly

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iesel and gasoline prices this summer will remain high, with diesel at an average $2.24 a gallon and gasoline at $2.28, the Energy Department’s Energy Information Administration said in a report released Thursday.

If the projections hold, it would mean a slight drop in current record-high retail diesel prices and new highs for gasoline.

In EIA’s latest weekly survey released Monday, retail gasoline and diesel prices each hit record highs for a third consecutive week, with diesel hitting $2.303 and gasoline hitting $2.217. (Click here for previous coverage.)

Similar high prices are expected throughout 2006, EIA said in its monthly Short-Term Energy Outlook. It projected average gasoline prices to peak at $2.35 a gallon in May, 38 cents over last year.

The agency cited crude oil costs as the primary factor in the projected increase. High world oil demand will continue and increase competition for imports, it said.

Light seet crude oil futures fell more than $1 a barrel in intraday trading Thursday, the Associated Press reported.

Oil fell $1.45 to $54.40 a barrel trading on the New York Mercantile Exchange, and gasoline futures fell too, AP said.

EIA said additional changes in gasoline specifications and tight U.S. refinery capacity could also push up operating costs and limit supply, adding further pressure on pump prices.