Tough Driving Ahead?
Some somber news for American motorists as they head into the peak summer driving season.
In its monthly report released Thursday, The International Energy Agency said that "It is widely expected that the U.S. gasoline markets will be tight again this summer ... Consequently price spikes through the peak demand season are a possibility to contend with."
The Paris-based IEA is an agency of the Organization for Economic Cooperation and Development, a group of the world's wealthiest nations.
And this month's cuts in production by the Organization of the Petroleum Exporting Countries are likely to exacerbate the problem. Ten OPEC countries agreed - Iraq did not - to trim their official output by 1 million barrels effective April 1. Refiners who must buy crude to process gasoline and other refined products will face paying higher prices as the supply tightens.
"We foresee not total shortages of gasoline, but the possibility one again regional supply imbalances and a lot of volatility in the marker," said the report's editor, Klaus Rehag.
He went on, "Ultimately, we'll have enough supply but it could end up the wrong place at the wrong time, especially if there are unforeseen circumstances" such as problems with pipelines or refineries. Tensions in the Middle East could also add to problems.
Last year's severe winter had U.S. refineries producing heating oil well into spring. The delay in the making the conversion to producing gasoline caused regional shortages and spikes in retail prices.
Peter Gignous of Salomon Smith Barney said it was a little premature to worry about a gas shortage.
"There are some legitimate worries, but I think some advocates of higher gasoline prices are a little overzealous."
Gignous said that refineries were enjoying "terrific" profit margins. "This should make refiners buy crude and make gasoline."
Analysts said it would be a few more weeks before the prospects for gas prices would be known.
The IEA estimated the average world demand for oil at 77.3 billion barrels a day during the first quarter of the year. It predicted that demand would decline during the second quarter by 2.4 billion barrels, then rebound in the second half of the year.
The United States is the world's largest consumer of petroleum products.
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