Government Expects Average Gas Price to Peak at $3.50 in May, June

WASHINGTON, D.C. --- The Energy Department has projected that the U.S. monthly average retail regular gasoline price will peak near $3.50 per gallon in May and June.

The projection was included in the March Short-Term Energy Outlook, published by the department's Energy Information Administration (EIA). The report, however, noted that even if the national average monthly gasoline price peaks near that level, it is "possible that prices during part of a month, or in some region or at some stations, will cross the $4 per gallon threshold." The report cited the following reasons:

Variations around the monthly average --- Daily or weekly national average prices will inevitably be both above and below the monthly average price, whatever it turns out to be. "For example in May 2007, the average monthly retail price for regular gasoline was nearly $3.15 per gallon, but the weekly price within that month varied from as low as $3.05 per gallon to as much as $3.22 per gallon," EIA noted.

Variations across regions --- There's also significant regional variation, with prices along the West Coast often well above the U.S. average price. "For example, on March 10, the U.S. average price was nearly $3.23 per gallon, while the average price in San Francisco was nearly $3.61 per gallon, 38 cents per gallon above the U.S. average, while the average in Denver was $3.04 per gallon, or 19 cents below the U.S. average," EIA pointed out. "In other periods, it has been the Midwest, and more specifically Chicago, that has seen prices spike well above the U.S. average."

Variations within regions --- Finally, there's significant variation in prices across stations and areas within any region. "For example, gasoline prices at a station in Glen Echo, MD often run well above average prices across the Maryland suburbs of Washington, D.C.," EIA said.