Expect to Spend More on Gasoline

    You can expect to pay more when you tank up in coming months as the economy begins to climb out of its economic slump. The U.S. Energy Information Administration's (EIA), in its Short Term Energy Outlook,  said it expects regular grade gasoline prices to peak in July, with an average of about $2.70 per gallon. 

     You may have noticed that U.S. prices have been edging up at the pump since around April, but they are still a big bargain compared with last summer when they hit around $4 a gallon. That's one reason consumers may be a little looser about filling their tanks this summer.

   The EIA Outlook projects that U.S. gasoline consumption will rise by about 0.3 percent this year, with increases coming in the second half. That compares with a 3.5 percent drop in demand in 2008 when prices were so high.

     Despite the weak economy and the grim rise in unemployment, real disposable income is expected to rise in 2009, partly due to tax rebates, and this, too, is cited as a reason for an expected increase in drivers' gasoline appetite. Real disposable income is an important “driver” in gasoline demand. But that's not the full picture. 

Good Gasoline Deal

     According to EIA, large changes in the pump price, especially when they last for several months, also have a significant impact on consumption. So, even though you may pay more this week to fill up than you did a few weeks ago, you remember what you paid last year, and you feel like you're getting a pretty good deal!  

     And you are, relatively speaking. The national average for regular gasoline rose 10 cents per gallon this past week. That makes the six-week increase in average pump prices 58 cents per gallon. While the national average gasoline price is now $2.62 per gallon, that's $1.42 less than a year ago!