Mid-February Gas Prices Have Never Been Higher
NATIONAL REPORT -- Gasoline prices this time of year have never been higher than they are now, and experts warn that they will only go up from here.
A gallon of regular gasoline reached a nationwide average of $3.53 yesterday, an increase of 25 cents since Jan. 1. Analysts are predicting the average will go up to $4.25 a gallon by late April and perhaps will jump as high as $5 a gallon during the prime summer driving season. In fact, premium gasoline in some states, including California and Hawaii, has already reached $5 per gallon.
At this time in 2011, regular gasoline averaged $3.17 per gallon.
As gasoline prices continue to rise, consumers are likely to make less shopping trips. In fact, a 25-cent hike, if sustained over a year, would cost the economy $35 billion, according to a report by the Associated Press. Americans spent 8.4 percent of their household income on gasoline in 2011 when it averaged $3.51 a gallon.
"You're going to see a lot more 'staycations' this year," Michael Lynch, president of Strategic Energy & Economic Research, told the AP. "When the price gets anywhere near $4, you really see people react."
Increased oil demand worldwide, refinery closings and Iran threatening to block the Strait of Hormuz -- a main Middle Eastern thoroughfare for transporting oil -- are considered three of the largest drivers behind why oil prices keep rising.
The United States does not get a majority of its oil from the Middle East. That honor goes to Canada. However, Americans are affected as much as anybody else by Middle East tensions.
On NBC's "Today" show this morning, CNBC analyst Jim Cramer said the only way Americans will not see an average of $5 per gallon of gas by Memorial Day would be if the Iran situation is resolved and it stops its nuclear program.
"Iran is a gigantic exporter to Europe," Cramer said on the TV program. "Europe has to find its oil somewhere. They take away from ours. There is not a lot of excess supply right now."
The host of CNBC's "Mad Money" did note that one thing locally could reduce the demand for oil: trucks -- a primary consumer of imported oil -- can begin to switch to natural gas fuel, something President Obama has endorsed, said Cramer.
As CSNews Online reported last month, compressed natural gas (CNG) could be a viable alternative to petroleum, as it is a cleaner-burning, locally produced fuel that sells for about $2 per gallon less than its hydrocarbon counterpart.