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Low supply may spawn high prices at pumps

WASHINGTON — The Energy Department raised concerns Monday that low crude-oil and gasoline stocks could lead to price spikes for motorists this summer.

The caution came as President Bush was to receive an interim report from his energy task force on how to address short-term energy problems including growing worries about power blackouts in the West this summer.

Energy Secretary Spencer Abraham said it is too early to predict the impact of the decision last week by the Organization of Petroleum Exporting Countries to curtail production by 1 million barrels a day.

"If you reduce supply worldwide, it's going to have some impact down the road," Abraham said on NBC's "Today."

But even before calculating the fallout from the latest OPEC action, the Energy Department said Monday that both crude-oil inventories and gasoline stocks are 6 percent to 7 percent lower that what they traditionally have been this time of year.

John Cook, chief petroleum analyst for the department's Energy Information Administration, called the current inventory levels a disturbing sign for this summer's heavy driving season.

While stocks likely will increase somewhat, "We are beginning the driving season with very little stock cushion," Cook said in remarks prepared for an oil refiners' conference in New Orleans.

Gasoline prices nationwide for all brands average $1.41 a gallon, slightly lower than in recent weeks, the Energy Department said.

While the DOE earlier this month predicted prices at the pump this summer would increase modestly to about $1.49 on average, analysts said they would not rule out severe price spikes beyond that should supply problems develop.

Last year gasoline soared past $2 a gallon in some parts of the country, especially in the Midwest.

In a presentation to the refiners conference, Cook said gasoline stocks in the Gulf Coast area are nearly 13 percent below the normal five-year average and 9 percent lower than at this time last year.

"For crude oil the situation is not much better," said Cook.

Nationwide, he said, crude stocks are 7 percent below the low end of the normal range for this time of year.

While the impact of OPEC's latest production cuts is not expected to show up in the U.S. market for six to eight weeks, it is likely to aggravate stock supplies even more, analysts said.