Gas prices heading toward $3 a gallon, AAA says

gas prices rise
gas prices rise
Drivers fill fuel tankers at a depot on Friday in Harrisburg, Pa.

Welcome economic news might translate to higher gasoline prices in time for the summer travel season.

"Our forecasts show that we very well may see $3 per gallon gasoline, and maybe even as high as $3.10, sometime this summer," said Jessica Brady of the AAA Auto Club South that serves the Georgia and Florida regions. "But we also hope it will be very short-lived."

Gas prices are already substantially higher than a year ago, according to the U.S. Energy Information Administration, which this week reported a national average price of $2.751 cents per gallon of regular fuel. In mid-March 2009, the national average was $1.91.

Brady said the gradual climb in pump prices-and the forecast that the spike may continue-is linked to investor confidence in economic indicators that have been decidedly positive in recent weeks.

"Fuel consumption was up 3 percent year-over-year last month," she said. "In another report that came out last week, from the Labor Department, the unemployment rate did not rise as expected."

When the economy looks good, investors become more confident that people will travel more-and fuel demand will increase. More demand, she added, can create higher prices.

Rising per-barrel prices for crude oil is another indicator of future pump prices.

"Last week, we noticed gasoline prices had remained more stable, but when crude closed higher last Friday, retail prices moved up in just a few days," she said.

Friday's closing was $81.50 per barrel, compared to $79.66 the previous week, and $78.19 the week before that. "We've seen, over three weeks, a steady increase in crude oil."

The Energy Information Administration's long-term outlook also calls for $3 per gallon gasoline later this year.

"EIA forecasts that the annual average regular grade retail gasoline price will increase from $2.35 per gallon in 2009 to $2.84 in 2010 and to $2.96 in 2011 because of the projected rising crude oil prices," said the group's newest forecast, posted Tuesday. "Average U.S. pump prices likely will exceed $3 per gallon at times during the forthcoming spring and summer driving season. Projected annual average retail diesel fuel prices are $2.96 and $3.14 per gallon, respectively, in 2010 and 2011."

Although prices are rising, Georgia still enjoys one the nation's lowest average gas prices, and Augusta historically has some of the lowest prices in Georgia.

"Georgia, when compared to Florida and a lot of other areas of the country, has lower prices than most," Brady said, noting that the state average for a gallon of regular is $2.69, compared to $2.82 in Florida.

Augusta's per-gallon average of $2.66, she added, is much lower than the state average.

 

 

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