Short-term energy and summer fuels outlook

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Continued steady world oil demand growth, combined with only modest increases in world spare oil production capacity and the continuing risks of geopolitical instability, are expected to keep crude oil prices high through 2006.

The price of West Texas Intermediate (WTI) crude oil is projected to average $65 per barrel in 2006 and $61 in 2007. Retail regular gasoline prices are projected to average $2.50 per gallon in 2006 and $2.40 in 2007. Summer (April 1 to September 30) regular gasoline pump prices are expected to average $2.62 per gallon, 25 cents higher than last year's average of $2.37 per gallon. Retail diesel prices are also expected to average $2.62 per gallon this summer.

World oil market conditions, growth in U.S. demand, and ongoing implementation of domestic fuel quality requirements are expected to keep consumer prices for motor fuels and other petroleum products high in 2006. Higher crude oil costs together with higher margins (retail price minus crude oil cost and taxes, per gallon) are also expected to contribute to increases at the pump.

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