Retail pump prices hit 26-month high
Although supplies remain plentiful and gasoline demand has diminished since September, retail gas prices are rising because oil prices are at the highest levels since October 2008. The two-week advance paused on Monday as benchmark oil for January delivery lost 23 cents at $88.96 a barrel in midday trading on the New York Mercantile Exchange. A stronger dollar kept a lid on prices. Since oil and other commodities are priced in dollars, a stronger dollar makes them more expensive for buyers who use other currencies.
The national average for a gallon of regular gasoline hit $2.951 on Monday, according to AAA, Wright Express and the Oil Price Information Service. That's nearly 10 cents higher than a week ago and 32 cents more than a year ago.
"The U.S. has never spent Christmas with a $3-a-gallon average price for fuel," OPIS said. It's the highest national average since Oct. 19, 2008, according to OPIS. Prices have risen 30 to 40 cents from year-ago levels in nearly half the states, and many motorists already pay $3 a gallon or more.
For example, prices range between $3.055 a gallon to $3.519 a gallon in Washington, California, Delaware and Maine. Drivers in Nevada, Oregon, North Dakota, Illinois and Wisconsin, among others, pay between $2.96 a gallon and $3.027.
Colorado, Wyoming, New Mexico and Texas have some of the cheapest pump prices, from $2.682 a gallon and $2.812 a gallon.
If oil prices linger in the current range near $90 a barrel, the national average could reach $3 before the end of the year, several analysts say.
"We're within spitting distance right now," said Stephen Schork, an energy analyst and publisher of The Schork Report. "Whether we get there by the end of the year or by the end of January, as far as consumer's concerned, we're there already by a psychological standpoint."
For every penny the price at the pump increases, U.S. consumers pay an additional $4 million, according to Cameron Hanover energy analysis agency. On an individual basis, a motorist who bought 10 gallons of gas Monday, on average, paid about $3.20 more than a year ago.
Schork expects energy demand to waver with prices between $2.90 a gallon and $3 a gallon. If oil reaches $100 a barrel, retail gas prices will be around $3.30 a gallon or higher, which would be a "significant obstacle" for motorists, he said.
In other Nymex trading in January contracts, heating oil lost 0.88 cent at $2.4786 a gallon, gasoline fell 1.65 cents to $2.3356 a gallon and natural gas rose 13.1 cents to $4.480 per 1,000 cubic feet.
In London, Brent crude dropped 16 cents to $91.26 a barrel on the ICE futures exchange.