Feds to Study Gas Prices

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Feds to Study Gas Prices

DETROIT -- U.S. Energy Secretary Spencer Abraham said his department will take a harder look at the factors underlying higher gasoline prices, including the country's need for more refining capacity.

During periods of peak demand, such as the upcoming summer travel season, the United States relies on gasoline imported from Europe, the Caribbean and other parts of the world, because of insufficient domestic refining capacity, according to the Associated Press.

Speaking at the opening of an energy summit in Detroit, Abraham also said the Energy Department would focus on the need to domestically produce more crude oil, from which gasoline is refined. Abraham has said political tensions in the Middle East make crude supply disruptions a possibility.

Abraham said that barring any unforeseen factors, the average price of gas should be "considerably lower" this summer than it was a year ago, even though he anticipates regional spikes, particularly in the upper Midwest.

The average nationwide price of unleaded gasoline is currently $1.39 per gallon, 23 cents cheaper than a year ago, the report said.

The price of gas tends to move higher during the summer, when environmental laws require refiners to produce multiple blends of fuel to comply with local air quality standards. Any snags in transporting the gasoline, or unexpected refinery shutdowns, can cause prices to rise as retailers become willing to pay more out of fears of a supply shortage.

Oil companies say strict environmental regulations stand in the way of building new refineries and have instead pursued a strategy of increasing the output from existing facilities.