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Washington: Growth in once-insatiable US oil demand is expected to decline sharply from earlier estimates thanks to record energy prices and an economy that may fall into a recession in the first half of this year, the government's top energy forecasting agency said on Tuesday.
US petroleum consumption is expected to increase by only 40,000 barrels per day (bpd) this year to an average 20.74 million bpd, according to the Energy Information Administration (EIA).
That is much lower than the EIA's estimate last February that oil demand in 2008 would total about 21.23 million barrels per day. The slowing reflects the sticker shock facing US consumers as they grapple with soaring prices at the pump and the slowing in the economy.
"US real gross domestic product is expected to decline slightly in the first half of the year and then start growing again, with growth for 2008 as a whole at 1.3 per cent, the slowest annual rate since 2001," the agency said in its latest monthly energy forecast.
"The slowing economy combined with high petro-leum prices is expected to constrain growth in US consumption of liquid fuels and other petroleum products to just 40,000 barrels per day in 2008," the EIA said.
Estimates
The Energy Department's analytical arm revised upward its estimate that the US crude oil price for this year will average $94 a barrel, compared with $72 last year. Oil hit a record $109.72 a barrel on Tuesday at the New York Mercantile Exchange.
The high oil costs will be passed on to consumers at the pump, as the national monthly price for regular gasoline is expected to peak at a record $3.48 a gallon in May, the EIA said.
The White House said on Tuesday there was not much the government could do to help consumers at the pump.
"This problem didn't get started overnight, and it's not going to be solved overnight," said White House spokeswoman Dana Perino.
"It would be wrong of the president to provide false hope to people to think that we are going to be able to have an immediate impact to reduce gas prices. This is something we're going to have to all work through."
The EIA also sees lower global oil demand growth, which it expects will be 30,000 bpd less this year than earlier forecast, with petroleum consumption at 87.04 million bpd.
The Paris-based International Energy Agency on Tuesday predicted an even sharper decline in world oil demand growth, cutting it by 80,000 bpd from the previous forecast, with global oil demand this year at 87.5 million bpd.
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