By Tom Doggett
WASHINGTON, Aug 20 (Reuters) - U.S. drivers can expect gasoline prices to rise over the next few weeks thanks to tighter motor fuel supplies and strong demand, the government warned on Wednesday.
"With the Labor Day weekend less than 2 weeks away, gasoline prices are likely to rise even further on a national basis, as recent increases in wholesale prices continue to be passed through to retail markets," the Energy Information Administration said in its weekly review of the oil market.
However, the Energy Department's analytical arm said pump costs should ease in September as high prices make it profitable for refiners to produce more fuel "just as demand falls off following the end of the summer season."
Last week's massive blackout shut down three refineries in Ohio and Michigan and refineries in Ontario, Canada, causing a kink in gasoline supply lines.
EIA said there has been substantial progress in restoring operations at these refineries, but that not all the affected units are back up to pre-blackout capacity.
"These supply problems, coupled with strengthening demand in August, are putting pressure on retail prices," EIA said.
The national retail price for gasoline increased 5.6 cents a gallon over the last week to $1.63, up 24 cents from a year ago and the highest level since early April, EIA said.
Prices on the West Coast jumped 17.3 cents to $1.89, the second highest weekly regional price rise recorded by the EIA. West Coast pump costs are up 36 cents from a year earlier.
"A price jump of this magnitude is a clear indication of significant problems with supply," EIA said.
There have been several unplanned oil refinery shutdowns in California, and earlier in the month a refinery outage in Washington. A pipeline from the East that supplies about 30 percent of the gasoline used in Phoenix, Arizona via Tucson was shut down completely on Aug. 8 due to a rupture.
The pipeline may reopen this week, but not before pump prices in the city climbed to $3.89 a gallon at one gasoline station, EIA said.
"The result was to pull additional gasoline supplies from California, which had tight supplies itself already," it said.
Because California is dominant in the West Coast gasoline market, this supply disruption has spilled over to most of the region, according to the agency.