Gas Price Forecast Grim: $4 a Gallon This Summer

The EIA numbers for diesel are even higher, with a predicted average of $3.90 during March and April, and a summer average of $3.73, an increase of 88 cents over the 2007 summer average.

At these prices, the average cost to fill up a 300-gallon tank in a typical long-haul tractor trailer would reach $1,170.

"This forecast tells American families they shouldn't expect relief from skyrocketing prices this summer," said Congressman Edward Markey, the Massachusetts Democrat who chairs the House Select Committee on Energy Independence and Global Warming.

"The prospect of $4 gas is the result of the Bush administration's policy of tax breaks for Big Oil and tough breaks for American families," he said.

General David Petraeus testifying before the House Armed Services Committee (Photo courtesy U.S. Army)

America's top military commander in Iraq told lawmakers on Capitol Hill today that an early pullout by American troops could disrupt the flow of oil from Iraq.

General David Petraeus told the House Armed Services Committee that might push today's record U.S. gasoline prices even higher.

On March 31, the national average for a gallon of gas hit a new all-time record of $3.28 per gallon, according to a survey done by the American Automobile Association.

The EIA reports that high gasoline prices are motivating drivers to conserve by driving less and purchasing more fuel-efficient transportation. Consumer sensitivity to gasoline price changes increases during periods when retail prices exceed $2.50 per gallon, the agency says.

High gasoline prices and a slowing economy, which have reduced gasoline demand in recent months, are also projected to impact demand during the 2008 summer driving season, according to the EIA.

U.S. consumption of liquid fuels and other petroleum is expected to decline in 2008 by about 85,000 barrels per day as a result of the economic slowdown and high petroleum prices, the EIA said. "After accounting for increased ethanol use, U.S. petroleum consumption is projected to fall by 210,000 barrels per day in 2008.

As part of a three-point plan to alleviate the strain on consumers and move America towards renewable alternatives to oil, Markey called on the Bush administration to stop filling the Strategic Petroleum Reserve at the rate of 70,000 barrels per day to send a signal to oil speculators.

He also called on the oil companies to increase their investments in renewable alternatives to oil and to drop their defense of billions in tax breaks.

Pumping gas is projected to be more costly than ever this summer. (Photo credit unknown)

"While the financial commitment that American families are being forced to make to drive their cars and heat their homes keeps rising every month, Big Oil's only commitment seems to be to opposing the renewable energy investment package that would provide American consumers with relief," said Markey.

Last week, Chairman Markey and the Select Committee held a hearing with top executives from the world's five largest oil companies, which brought in over $123 billion in profits last year and spent more than $50 billion on schemes to prop up their stock prices.

At the April 1 hearing, Markey called on the companies to invest 10 percent of their profits into renewable energy alternatives to oil, noting that the bottom 20 percent of wage earning families in America are now spending 10 percent of their income on gasoline due to the current high prices.

The five largest oil companies spent only about one percent of their profits on alternatives last year, with ExxonMobil making more than $40 billion in profits, while spending just $10 million on research into alternatives to oil.

The companies are currently defending $18 billion in tax breaks that they receive but that Congress is trying to shift towards renewable energy.

J. Stephen Simon, senior vice president of Exxon Mobil told the Select Committee that currently the energy industry pays record levels of taxes.

"While our worldwide profits have grown," he said, "our worldwide income taxes have grown even more. From 2003 to 2007, our earnings grew by 89 percent, but our income taxes grew by 170 percent."

"Over the last five years, ExxonMobil's U.S. total tax bill exceeded our U.S. earnings by $19 billion," Simon said.

"Over the next five years, ExxonMobil plans to invest at least $125 billion," he said. "We depend on high earnings during the up cycle to sustain this level of investment over the long-term, including the down cycles."

The four other oil executives gave similar testimony, speaking of high investments, long investment cycles and high tax rates.

Chairman Markey was not persuaded. He said, "Oil companies like Exxon have consumers over a barrel and refuse to invest money in solutions that will reduce prices, help our economy and protect our planet."

Copyright Environment News Service (ENS) 2008. All rights reserved.