Should I increase my quarterly payment if it appears I will be short by $7,550 for the year? Will this reduce or eliminate a tax penalty?

It will definitely reduce the penalty but may not eliminate it. 

You will still be required to pay the penalty for 2017 underpayment.  If you increase your quarterly payments to compensate for the large shortage, you won't have a penalty for 2018, assuming your income is still in the same range..