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Ford expects gasoline to reach up to $4.25 a gallon

The No. 2 U.S. automaker made clear this week that pressure at the pump has leaked directly onto automakers’ balance sheets.

Ford Motor Co. executives said Thursday, May 22, that gasoline prices were a deciding factor in its decision to abandon earlier predictions for a return to profitability. Ford CEO Alan Mulally said a dramatic shift in vehicle preference from trucks to cars accelerated when gasoline prices passed the $3.50 a gallon threshold.

“It seemed to us that we reached a tipping point where customers began shifting away from these vehicles at an accelerated rate,” Mulally told reporters on Thursday.

Ford’s revised plans now account for average U.S. gasoline prices to range from $3.75 to $4.25 a gallon throughout 2008 and in 2009.

Fred Rozell, a gasoline pricing expert for the Oil Price Information Service, said with so many possible variables that could impact prices through 2009, it’s difficult to say whether Ford will need to change those projections as well.

“What we can guarantee is continued volatility in fuel markets,” Rozell told Automotive News.

National Unleaded Average
 RegularMidPremiumDieselE85**E85 MPG/BTU adjusted price
       
Current Avg.$3.88$4.11$4.26$4.65$3.19$4.20
Yesterday Avg.$3.83$4.07$4.21$4.59$3.16$4.16
Month Ago Avg.$3.53$3.75$3.89$4.21$2.91$3.83
Year Ago Avg.$3.23$3.43$3.55$2.92NANA
*Prices are in U.S. dollars per gallon
**The BTU-adjusted price of E85 is the nationwide average price of E85 adjusted to reflect the lower energy content as expressed in British Thermal Units - and hence miles per gallon - available in a gallon of E85 as compared to the same volume of conventional gasoline.

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