CONSUMER ALERT: Gas Prices On Track For Huge Spike; Get The Lowest Prices Near You
Nationwide, a gallon of regular unleaded gas averaged $2.977 on Friday and more than $3 a gallon in 20 states. That's up nearly 10 cents the past week and 34 cents higher than December 2009, AAA spokesman Troy Green says.
If crude crosses $90 for the first time since 2008 and continues to rise, as many industry experts forecast, the average price of regular unleaded could hit $3.15 or higher by year's end.
Gasoline is already at or near that in California, Connecticut, Maine, New York, Rhode Island and Washington.
Slumping demand usually pushes gas prices lower from autumn to late February. However, the strengthening global economy, weaker dollar, rising overall commodity prices and surging energy demand overseas will likely continue propelling prices into spring.
"A move through $90 a barrel seems very likely, and then we could quickly test $100," says Telvent DTN senior energy analyst Darin Newsom. "You could easily see a 15- to 20-cent rise (in gas prices) the next three weeks, if not sooner."
Consumers are unlikely to get a break anytime soon. "I don't see anything that's going to turn this puppy around and send it south," says Cameron Hanover industry analyst Peter Beutel. "For the next two to 12 weeks, the forecast is higher prices."
About 70% of the nation's gas is sold at convenience store chains. National Association of Convenience Stores spokesman Jeff Lenard says for every $1 increase in crude oil, gas prices rise about 2.5 cents per gallon.
Near term, few energy analysts expect crude oil to approach the $147 a barrel record set in July 2008, pushing U.S. prices above $4 a gallon.
But even $3 a gallon gas will pinch some consumers. "If they have to pay more for gas, they'll have less to spend on other things," Green says.
The higher gas prices could be partially mitigated by the tax deal, including a temporary cut in payroll taxes, agreed to by President Obama and GOP lawmakers. "To offset the impact of the tax package, you'd have to see a $60 rise in crude oil prices," says economist Brian Bethune of IHS Global Insight.
"Some people are going to get zapped a bit, but it depends on where you live," Bethune says. "In rural areas where people drive trucks and have long ways to go, higher gas prices tend to bite. In urban areas, more people use public transportation and the average commuter is probably driving a much more fuel-efficient car."
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