Soaring crude oil costs to blame, consumer groups also cite poor industry competition.
May 11, 2004: 5:55 PM EDT
WASHINGTON (Reuters) - U.S. motorists face several more weeks of soaring prices at the pump, with gasoline expected to hit a record $2.03 a gallon in June, the government said Tuesday. On average, that would be 21 cents higher than previously expected.
Gasoline prices are rising because of higher crude oil costs, which account for about 45 percent of the price of the fuel.
"Higher crude oil prices and rapid increases in mid-spring spot prices for gasoline have induced an upward shift in the forecast for gasoline pump prices," the Energy Information Administration said in its latest monthly energy forecast.
For the entire U.S. summer driving season, which runs from April through September, the Energy Department's analytical arm said it now expects gasoline to average $1.94 a gallon, 18 cents higher than its previous forecast.
The national price for gasoline jumped almost 10 cents over the last week to reach $1.94 a gallon on Monday, EIA said.
U.S. crude oil prices should average between $36 and $37 a barrel for the rest of this year, the agency said.
The latest forecast comes as two consumer groups on Tuesday issued a report blaming high gasoline prices on less competition in the U.S. oil industry because of mergers and the industry's reluctance to maintain large petroleum inventories.
The Consumer Federation of American and Consumers Union urged federal and state authorities to investigate the business practices of the major oil companies and help bring down energy prices.
The campaign of Democratic presidential challenger Sen. John Kerry said the Bush administration has done "next to nothing" to deal with record gasoline prices.
"With gas prices expected to go over $2 a gallon next month, the White House needs to do more than just pay lip service to a problem that is threatening to exacerbate the weak economy. The President needs to come up with a real plan to lower gas prices that considers all options," said Kerry spokesman Phil Singer.
Saudis propose more output
Crude oil traded at the New York Mercantile Exchange jumped to close above $40 a barrel on Tuesday -- the highest close since October 1990 -- on doubts that OPEC will be able to increase oil output enough to satisfy the world's appetite.
The EIA said oil production from OPEC, not including Iraq, averaged 25.8 million barrels a day in April, about 2.3 million above the cartel's official output quota.
Saudi Arabia on Monday called on OPEC to raise its quota by 1.5 million barrels daily. The cartel meets on June 3 in Beirut to vote on oil output levels.
"The fund considers that the (announcement) yesterday by Saudi Arabia to propose to the rest of the OPEC-producing countries an increase in the production is a good step to satisfy what is clearly strong demand," IMF Managing Director Rodrigo Rato told reporters
The International Monetary Fund also said on Tuesday it welcomed the Saudi proposal and was keeping a close eye on rising energy prices.
U.S. Energy Secretary Spencer Abraham on Tuesday also called the Saudi proposal "very positive." Abraham said he expects to meet with Naimi in late May at a meeting in Amsterdam of global energy producing and consuming nations.
"Potential price spikes remain a danger given the uncertainties surrounding the continued recovery of output and exports from Iraq, as well as political unrest in Venezuela," EIA said.
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