Government again raises estimates on oil, gas prices

The Energy Department predicts average monthly gasoline prices should peak at $3.73 a gallon in June, an increase of about 11 cents from last month's estimate. Regular-grade gasoline is expected to average $3.52 a gallon in 2008, 71 cents above last year's average.

Diesel fuel prices are projected to average $3.94 per gallon this year, up from $2.88 per gallon in 2007.

At the pump, gas prices dipped slightly overnight to remain at a national average of $3.61 a gallon Tuesday, and are well above the year-ago average of $3.04 a gallon, according to AAA and the Oil Price Information Service. Diesel prices remained at about $4.24 a gallon, and both were within about a penny of record highs set last week.

EIA expects average daily oil consumption in the U.S. will fall by about 190,000 barrels this year because of the economic slowdown and high prices. That is more than double last month's forecast of a 90,000 barrel per day decrease.

West Texas Intermediate crude is expected to average $110 a barrel this year compared with $72.32 a barrel last year, according to EIA. The latest estimate is a $9 a barrel increase compared with last month.

Light, sweet crude for June delivery broke $122 a barrel for the first time during Tuesday trading on the New York Mercantile Exchange.

Also Tuesday, Sens. Jack Reed of Rhode Island and Carl Levin of Michigan asked President Bush to create a federal task force "to investigate whether speculators are driving up prices in energy commodity markets through manipulative or deceptive practices." The Democrats asked that the group include the Secretary of the Treasury, Attorney General, and the chairmen of the Securities and Exchange Commission, Commodities Future Trading Commission, Federal Trade Commission and Federal Energy Regulatory Commission.