A U.S. recession in the first half of 2008 will cause the first drop in summer gasoline demand since 1991, the head of the Energy Department’s Energy Information Administration said Tuesday.
He estimated average gasoline prices at $3.60 a gallon this summer.
The U.S. projected an 85,000-barrel-per-day decline in gasoline demand for 2008, caused by higher gasoline and oil prices and the economic decline, said Guy Caruso, administrator of the Energy Information Administration.
West Texas Intermediate crude oil is expected to average $100.61 a barrel in 2008, up 7 percent from a March estimate, the Energy Department said in its monthly Short-Term Energy Outlook. The rising oil price drove up by 10 cents the department’s summer estimate of peak average gasoline prices to $3.60 a gallon.
“Technically, we are projecting a small recession in the first half of the year, and that’s our assumption,” Caruso said during a conference in Washington.
The U.S. was coming out of a recession the last time summer gasoline demand fell in 1991, and this year’s projected drop comes amid signs in the labor and housing markets that the U.S. economy may be contracting.
The Energy Department report showed that the U.S. gross domestic product likely will fall 0.18 percent in the first half of 2008 and will grow 1.2 percent for the year.
“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 found.
