By summer, gas on LI could be 50 cents higher

Oil futures slipped Tuesday on hints that OPEC might increase production to ease nervous markets, but the federal government said gasoline prices this summer could spike 50 cents a gallon higher than they are now.

New surveys show, meanwhile, that American drivers are cutting back on gasoline purchases. And retailing experts predict that consumers, still squeezed by the effects of the recession and struggling to keep household budgets balanced, will be hunting harder for bargains, preventing businesses from passing along many of their increased raw materials and transportation costs.

U.S. crude oil futures fell by 42 cents Tuesday in New York trading, to $105.02, after reports that Kuwait's oil minister, Sheikh Ahmad al-Abdullah Al-Sabah, told reporters that the Organization of Petroleum Exporting Countries was considering a special meeting to discuss a formal increase in output, even though some members already are increasing production informally. Experts estimate that about half of Libya's oil production -- a million barrels a day or about 1 percent of the world's production -- has been cut off.

At local gasoline pumps, the increases have slowed; regular averaged $3.746 on Long Island Tuesday, the AAA said, up 1.2 cents from Monday. Prices have been rising since September, but the recent surge, 34 cents in the past month alone, is due mostly to fears that unrest in the Middle East and North Africa will seriously curtail oil shipments from the region.

The U.S. Department of Energy forecast that pump prices could spike to a national average of more than $4 a gallon for regular this summer -- about 50 cents higher than Tuesday's national average of about $3.50 -- but probably would average about $3.70 during the summer -- 20 cents higher than now. "Motorists currently experiencing a jump in pump prices will likely see further increases from now through the spring," the federal agency said, "since the recent increase in crude oil prices has not yet been fully passed through to gasoline prices."

MasterCard Advisors' weekly SpendingPulse report, based on payments by credit card, cash and check, found U.S. motorists bought 1.8 percent less gasoline last week than the week before, or about 62.7 million barrels. Gasoline purchases usually increase in March over February with improving weather.

Al Ferrara, based in Manhattan as national director of the consulting firm BDO USA's retail and consumer product practice, said consumers might adjust over the long term to higher prices, but that, in the short term, higher gas prices are bad for retailers. "Customers are going to be looking for bargains," Ferrara said, to offset higher gas costs. With Bloomberg News