Just in time for the holidays: gasoline price hikes that may bring the national average to $3 by Christmas.
Analysts say they are startled at spiking crude oil prices driving up the cost of gas at the pumps. Blame it on multiple signs of an improving economy worldwide, with speculators pouring money into the oil market and sending the price of crude near $90 a barrel, after weeks in the low $80s.
"Demand (for gas) is up just slightly and supplies are down just slightly compared with this time last year, but in the grand scheme of things, the economic road to recovery is driving this," said Patrick DeHaan, senior petroleum analyst for GasBuddy.com. DeHaan said "there's a bullish sentiment that demand will continue to rise, and a lot of speculators are jumping into the market."
GasBuddy.com said the average price nationwide spiked 8.4 cents to $2.94 a gallon over the past week. The national average has increased 9.2 cents since last month and is 30.2 cents higher than this time last year.
If trends continue, the national average could hit $3 a gallon by Christmas.
"Three dollars a gallon has never happened on Christmas Day," DeHaan said. "In California, it could go as high as $3.50. We're seeing $3.15 to $3.30 now" in some California locales.
DeHaan said gas prices also are being driven up by increased demand in China's growing automotive market and easing worries over debt in European countries.
Prices are rising at a time motorists normally catch a break at gas pumps.
This year's summer months saw gas prices jump up and down amid fluctuating crude oil prices, overheated speculation in oil investments and flat consumer demand.
Historically, prices start to fall after Labor Day, the end of the traditional summer vacation season and when refiners roll out cheaper winter-blend gasoline. Demand for gasoline typically hits its lowest levels in December and January.
All that is being been overridden by crude oil prices, at their highest levels since autumn 2008.
Things could be worse. Energy analysts said the recent increased strength of the dollar has held down crude oil prices to some degree.
Since crude is priced in dollars, a weakening dollar makes crude more attractive to investors who buy it with pricier currencies. A stronger dollar makes that investment more expensive.
(Contact the Sacramento Bee's Mark Glover at mglover(at)sacbee.com.)
(Distributed by Scripps Howard News Service, www.scrippsnews.com.)