The expected growth in summer gasoline demand, would remain above the five-year average, the agency said, although it would be slightly lower than previously estimated as some drivers flinch at higher pump prices.

"We're looking at a global crude market that is straining" to meet world demand, said EIA administrator Guy Caruso.

US crude oil prices initially rose on the government's new forecast. On the New York Mercantile Exchange, crude oil futures for May delivery peaked at $56.84 a barrel for a 89-cent gain before profit-taking and an ease of supply fears erased the rise. Oil ended down $1.74 at $54.11 a barrel.

In its report, EIA estimated China's oil demand will jump 12 percent this year to 7.4 million bpd. China's runaway growth in oil consumption has helped to push crude prices higher.

MORE IMPORTS NEEDED

The higher demand for US gasoline "is caused by the increasing number of drivers and vehicles, and increasing miles traveled per vehicle," the EIA said. A flat to declining fuel efficiency in the entire US vehicle fleet is also a factor.

With no slowdown in US gasoline demand, refiners will have to pump out more fuel, the EIA said.

US refiners' summer production of gasoline will average 8.382 million bpd, up 0.5 percent from last year. But that slight increase cannot keep up with demand growth "due to limited growth in refinery capacity," the EIA said.

Imports will have to make up the difference to meet demand. This summer's net imports of motor gasoline and blending components are projected to average a record 893,000 bpd, up 4.7 percent from last year.

But those foreign supplies "may be harder to obtain than in previous summers and are expected to be costly," the EIA said.

US gasoline inventories have declined in recent weeks, but Caruso said motor fuel stocks will be "just adequate" to meet summer demand.

The House Energy and Commerce Committee began drafting an energy bill this week that would clear away some environmental restrictions so that mothballed US refineries could be restarted or new ones built. On Wednesday, the panel voted to expand US daylight-saving time by two months to help reduce energy consumption.

The Senate has yet to begin work on its version of an energy bill. However, the Senate and House bills would have no short-term effect on lowering gasoline prices.

While gasoline prices should peak in May, the nationwide price for the summer should average $2.29 a gallon, up 38 cents from last year, and not far from this week's $2.22 a gallon. When adjusted for inflation, the most expensive US gasoline was in March 1981 at $3.12 a gallon, the EIA said.

Rising oil prices are pushing up pump costs. "Almost all of the increase (in the cost of gasoline) is due to the crude oil price," Caruso said.

The price for US crude should average $56.62 a barrel this summer, compared to $41.12 for the same period last year.

The EIA said it expects crude costs to stay above $50 a barrel for the rest of 2005 and 2006.

US crude oil futures traded at a record high of $58.28 per barrel on Monday after a Goldman Sachs analyst last week forecast prices could spike to $105 per barrel.