Gas could be $3.75 a gallon by spring
Los Angeles Times Staff Writer
8:23 AM EST, December 27, 2007
Gasoline could average $3.75 a gallon across the U.S. in a few months,
pushing the price in California up and over the $4 mark, energy
analysts said Wednesday.
Several factors point toward a nightmarish spring for motorists, they
said, including persistently strong crude oil costs and the fact that
the traditional December drop in pump prices didn't materialize.
"If anyone expects gas to be less than a new record, they are not
thinking," said Fadel Gheit, senior energy analyst for Oppenheimer &
Co. "There is no question it will be much higher than last year."
Americans will start 2008 paying about 65 cents more a gallon than
they did in January 2007, according to the forecasts, and by April
could see self-serve regular selling for $3.50 to $3.75 a gallon.
In California -- where gas this year has fetched as much as 50 cents
more than the national average -- $4 a gallon "will no longer be
considered a rogue number," said Tom Kloza, chief oil analyst for the
Oil Price Information Service. "It will list for that much in a lot of
The Energy Department's weekly survey of service stations Monday found
the average pump price was $2.980 nationally, a couple of pennies
lower than a week earlier -- but much higher than the same period last
year, when the number was $2.341 across the U.S.
"It's unprecedented having prices this high at the end of the year,"
said Marie Montgomery, a spokeswoman for the Automobile Club of
Pump prices usually fall between Labor Day and the end of the year, in
recent years dropping about 17% in California.
This year they did the reverse, gaining 17%.
Demand was one reason. MasterCard's weekly SpendingPulse report said
the four-week average for gasoline purchases was 0.5% higher than a
year earlier, boosted by shopping and vacation trips. Kloza of the Oil
Price Information Service said Americans would burn about 2.5 million
more gallons of gasoline this week than they did during the same week
But the main culprit for high gas prices was the cost of crude oil,
which on the futures market closed at $95.97 a barrel Wednesday in New
The benchmark grade of U.S. crude averaged $72 a barrel this year, the
Energy Department said, up from $60.23 last year, $50.23 in 2005 and
$36.98 in 2004.
Next year, the agency said in its short-term energy outlook, the
average could be $85.
Both gasoline and diesel prices "are projected to average well over $3
per gallon in 2008, with gasoline prices peaking at over $3.40 per
gallon next spring," the outlook said.
Gas costs more in California than nationally because the state
requires a special blend to meet stiff air-quality standards and
because the formula switches to a more costly summer blend before much
of the rest of the nation.
Motorists found the New Year predictions infuriating.
"It's absurd, ridiculous," said Eric Mills, 40, a special-event
coordinator for the entertainment industry, as he filled up his 1990
Honda Prelude with $3.399-a-gallon gasoline at a downtown Los Angeles
"Every year I hear about fuel cells and other promising alternative
fuel possibilities -- and every year I'm still putting gasoline in my
Kloza said that nationally for the last 25 years, the difference in
the price of gas from the winter low to the spring high has been about
"I don't think we will see a typical surge, and we don't have to,"
Kloza said. With an increase of just 30%, he said, "you're talking
about 75 cents a gallon more from where they are now."