Summer nightmare: $3-a-gallon gas
The Energy Department sees gasoline prices rising as the economy recovers.
You'll be paying $3 a gallon or more for gasoline this summer. If you're a diesel user, look for $2.97, the department's Energy Information Administration says.
Your electricity bill is likely to move higher, but you may get a break on natural gas.
The projections are contained in the EIA's "Short-Term Energy and Summer Fuels Outlook."
The outlook, released today, says Americans will pay an average $2.92 a gallon for gasoline during the summer driving season (technically between April 1 and Sept. 30). But at the peak of the season, prices will top $3 a gallon.
Gasoline will average $2.84 a gallon for 2010, up 21% from the $2.35 average of 2009. In 2011, the average will move up to $2.96.
The reason: Crude oil will jump. The EIA is forecasting an average $85 a barrel by the fourth quarter of 2011.
The estimate looks way too conservative. AAA's Daily Fuel Gauge Report estimated the national retail price of gasoline at $2.83 today. And crude oil passed $86 a barrel on Monday; there's talk that $90 is within reach.
If that happens, $3-a-gallon gasoline and $100-a-barrel crude are very nearly certain. That may cause problems for airlines and others.
And you will hear a lot of grumbling from consumers.
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[BRIEFING.COM] The S&P 500 settled lower by 0.8% after early strength turned into afternoon weakness.
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