WASHINGTON - The national average price for a gallon of gasoline edged up 9 cents in the past month, and at $2.75 is at its highest level since October 2008 . And that may just be the beginning, notes USA Today; some oil and gasoline analysts predict fuel prices will reach $3 soon because of the usual spring rally prior to the start of the summer driving season.
However, pump prices will likely not go much above $3 or even stay that high for long because of the weak economy and refineries€™ ability to increase production.
"Three dollars a gallon is probably a pretty rich price for the U.S. in 2010," said Tom Kloza, analyst for the Oil Price Information Service (OPIS).
Nationally, regular gasoline averaged $2.75 per gallon on Monday, an advance of 81 cents from a year ago, according to AAA, OPIS and Wright Express.
By April, Kloza estimates parts of the nation will see $3 a gallon gasoline, and the Energy Information Administration also expects gasoline prices to go above $3 a gallon during this spring and summer.
But several things may prevent prices from reaching too high. For example, unemployment reached 9.7 percent last month. "People just aren€™t driving to work like they were," said Jim Ritterbusch, president of Ritterbusch and Associates.
Ritterbusch predicts that demand won€™t increase as much and pump prices will peak between $3 a gallon to $3.25 a gallon from now until July Fourth, before falling due to lower demand for the remainder of the summer.
Also impacting pump prices is refinery capacity, which is currently at 14 million barrels of crude oil per day but those refineries could process close to 17.7 million daily. Kloza said that the potential for higher prices could generate more production, which would create more supply and keep prices reasonable.
Hear more from Kloza at the upcoming NACS State of the Industry Summit in Chicago, April 13 to 15. Register today.
Learn more about the dynamics of the motor fuels marketplace from these NACS resources: