Gasoline Prices Highest Since 2008

National gasoline prices reached an average of $3.14 a gallon this week, according to the U.S. Energy Information Administration. That means gas prices today are 53 cents more per gallon compared with a year ago and the highest prices we’ve seen since October 2008.

Gas prices vary by region (see chart below), with some as high as $3.45 a gallon in California and as low as $2.99 in Texas. So what gives? Mainly it’s because the global economy is running full-speed, again, but oil production isn’t keeping up with demand. Recent turmoil in the Middle East and some short-term logistics constraints also are affecting the traded price of oil.

According to USA Today, there’s a bottleneck with crude oil supplies coming out of Oklahoma. This one focal point happens to supply some of the physical oil typically used in selling futures and options of oil on the New York Mercantile Exchange, which is a major player in futures/commodity trading.

The EIA’s own short-term energy outlook suggests we should expect national regular-grade gasoline prices of around $3.15 a gallon for 2011 and $3.30 a gallon in 2012. The EIA points out there is “significant uncertainty” with its modeling predictions. The agency states that there is a 35% chance that national averages may exceed $3.50 a gallon this summer and a 10% chance they will exceed $4 a gallon nationwide. Given the regional nature of gasoline prices, that means, worst-case scenario, some West Coast communities could reach $4.25 average prices within the next few months.