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OPEC Boost May Not Help Gas Prices By H. JOSEF HEBERT, Associated Press WriterWASHINGTON (AP) -- The Energy Department today predicted sharply higher gasoline prices this summer even if the world's oil producers agree later this month to increase production.
And government analysts forecast that if higher production is put off until the fall, there likely will be a repeat of the soaring heating-oil prices that have plagued the Northeast this winter.
The forecast by the Energy Information Administration said gasoline prices, nudging near $1.50 a gallon on average nationwide, easily could jump another 20 cents a gallon by May and June-- and probably spike higher in some places.
Members of the Organization of Petroleum Exporting Countries are scheduled to meet March 27 to decide whether to increase oil production and ease an acute crude-oil shortage worldwide. Worldwide consumption is 2 million barrels a day greater than supply. A barrel is 42 gallons.
Three major producers -- Saudi Arabia, Venezuela and Mexico -- have already said they will recommend some production increases and another producer, Kuwait, has signaled a willingness to go along.
But the analysis released today by the Energy Department's statistical agency suggested that even major production increases of 2.5 million barrels a day, if begun immediately, would not head off significantly higher gasoline prices this summer.
The agency concluded that the additional oil would not show up in time to suppress gasoline prices as Americans take to the road for the summer -- historically the busiest driving season of the year.
The government forecast no easing of gasoline prices in May and June, with average nationwide prices heading conceivably into the $1.70-a-gallon range and possibly higher, sources familiar with the report said.
That assumes an increase in oil production.
The analysis used a number of production scenarios, from OPEC's delaying additional oil production until the fall to a decision to pump an additional 2.5 million barrels a day, beginning in April.
None of the scenarios was shown to have much of an impact in short-term gasoline prices heading into the summer, said the source, who spoke on condition of anonymity. It would take time for the new supplies to work into the system.
Just over a year ago, OPEC oil producers cut production by 4.3 million barrels a day after seeing world oil prices plummet because of a supply glut.
Since then, oil prices have soared from $10.72 a barrel on Dec. 10, 1998, to $31.78 a barrel today on the New York Mercantile Exchange.
AP-NY-03-06-00 1236EST<
http://www.newsday.com/ap/business/ap778.htm
-- Martin Thompson (mthom1927@aol.com), March 06, 2000