The average price for a gallon of gas was up yet again over the weekend and is 11 cents higher than last week, settling at $3.77 nationally. At that rate we'll see $4 gas by early May, but drivers have already begun buying less gas.
Gas prices have been on a roller-coaster over the past three years. After experiencing new lows — gas cost $1.670 a gallon as of Dec. 29, 2008 — prices are once again near an all-time high. What’s worse is that high gas prices are possibly here to stay for the foreseeable future, industry experts say.
Drivers are already reacting to the change. Gas consumption has been down for five consecutive weeks, according to MasterCard Spending Pulse, which tracks 140,000 gas stations. In the first week of April, consumption was down 3.6%, or 2.4 million gallons of gasoline, the company said.
Average gasoline prices have stayed above the $3 level since early December 2010, according to the American Petroleum Institute, though the prices remain below the annual averages in 2008, when gas prices reached $4.062 when adjusted for inflation into February 2011 dollars. The increase in March means that gas prices have risen eight times in the past nine months, according to the U.S. Energy Information Administration.
“U.S. gasoline prices at the pump continue to climb and should average $3.80 per gallon next week,” Olivier Jakob of oil market analysis firm Petromatrix said Friday.
Gas prices are linked to the price of oil, which has also seen steady increases since the recent crisis in the Middle East. Speculation about Libya has accounted for about 60% of the volume of crude oil trading on the New York Mercantile Exchange since Feb. 15, according to KBC Energy Economics, an energy consultant.
One commodities expert suggests that high gas prices — even if not at $4 a gallon — could be here to stay through the end of 2012.
Of course, commodities trading is extremely volatile and speculative, and it doesn’t necessarily reflect all the facets of the real-world gasoline industry. But there aren't many experts painting a picture where pain at the pump will be alleviated any time soon.
Drivers Start to Cut Back on Gas as Prices Rise (The Associated Press)