Higher gas prices for the 4th may not last

[June 26, 2010]  WASHINGTON (AP) -- Gasoline prices are creeping up, just as summer driving season kicks into full gear with the July 4th holiday weekend.

Luckily, the price rise could fizzle just after the last firecracker goes off.

AAA expects gasoline prices to average between $2.70 and $2.80 per gallon for the holiday weekend. Abundant supplies of oil and gasoline coupled with tepid demand because of high unemployment and the uncertain economic picture should keep gasoline and oil prices in check through Labor Day, analysts say.

"There's nothing to suggest, from a supply-demand standpoint, that we should see higher prices," oil analyst and trader Stephen Schork said.

For the rest of the summer, pump prices should stay between $2.60 and $2.90 per gallon, said Tom Kloza, publisher and chief oil analyst of the Oil Price Information Service.

"There will be a lot of back and forth, but nothing really conclusive," he said.

The bottom line for drivers is that they should expect to pay about $140 a month for gasoline over the summer if prices average $2.80 per gallon. A typical driver uses about 50 gallons of fuel per month. Fuel for a 300-mile vacation trip would run under $100 roundtrip for a car that gets 20 miles per gallon.

More people are expected to take a summer trip after resorting to "staycations" during the worst of the recession. AAA says almost 35 million Americans will travel this July 4th, up more than 17 percent from a year ago. Most of them are driving.

Gasoline prices rose 0.2 cent Friday to a national average of $2.755, according to AAA, Wright Express and Oil Price Information Service. Prices have risen 3.6 cents in the past week and are 8.8 cents higher than a year ago.

Though gas at $2.70 to $2.80 per gallon isn't cheap, the good news for drivers -- and the economy -- is that earlier predictions for a nationwide average of $3 or more never panned out. Gas peaked at $2.93 per gallon on May 6. Even though drivers in some western states like California are used to seeing prices top the $3 mark, in other parts of the country it's a psychological barrier that discourages road trips, analysts say.

Dale Reaver, 55, is thinking about a road trip to Maine and Canada from Ohio, but he's worried about the cost of gasoline.

"If I really want to go, I'll go, and we'll eat the gas price," he said as he filled up his Chevrolet Cobalt at a Marathon Oil station in Columbus, Ohio. The price of unleaded regular there was $2.569 per gallon on Friday morning.

"If gas gets too outrageously expensive we will not go," he said.

Even with prices well below the record $4.11 per gallon set two years ago, oil consumption and miles driven are at about the same levels as they were in 2005, according to government data.

Schork said oil prices over the summer may range from about $65 per barrel to nearly $80.

Weak demand for oil does not always mean lower prices. Big moves in U.S. stock markets, an active hurricane season and a weaker dollar can send crude prices much higher.

Oil prices for the week were about flat. Benchmark crude for August delivery rose $2.35 to settle at $78.86 a barrel on the New York Mercantile Exchange. Oil rose Friday with forecasts of a potential hurricane heading into the Gulf of Mexico next week. Big storms can disrupt operations on oil and gas platforms and at refineries on shore.

In other Nymex trading in July contracts, heating oil added 5.50 cents to settle at $2.1122 a gallon, gasoline gained 7.43 cents to settle at $2.1678 a gallon and natural gas picked up 11.3 cents to settle at $4.861 per 1,000 cubic feet.

Brent crude rose $1.65 to settle at $78.12 a barrel on the ICE futures exchange.

[Associated Press; By MARK WILLIAMS]

Associated Press writers Carlo Piovano in London and Eileen Ng in Kuala Lumpur contributed to this report.

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