Crude oil futures spiked to a 30-month high on Monday – retail gasoline prices rose 5.00 cents from the previous week to $3.61 a gallon, an increase of 28.9 percent from a year earlier.
The higher costs have been driven by unrest in Libya and other oil-producing Middle East countries, along with rising energy demand from a strengthening U.S. economy.
Most of Libya’s 1.6 million barrels a day of crude output capacity has been shut down by the fighting. However, supplies from other oil producers in the Middle East and North Africa have not been disrupted, and some analysts expect oil prices will drop as protests in the region die down.
Higher prices at the pump threaten to sap consumer spending and ripple across the economy through increased costs of shipping and products.
“The effects of international turmoil in oil exporting countries in the Middle East and North Africa and developments in earthquake-ravaged Japan continue to impact the upward climb of crude oil and, in turn, gas prices,” said Jim Lardear, director of Public and Government Affairs for AAA Mid-Atlantic.
“As the peak driving season gets underway, motorists continue to feel the pain at the pump. Although speculation can run awry, our analysts continue to believe gas prices will top out around $3.75 a gallon this spring.”
“The surge in oil prices since the end of last year is already doing significant damage to the economy,” says Mark Zandi, chief economist at Moody’s Analytics.
“We’re at the bottom of the oil food chain,” said Randy Meyer, Kum & Go’s director of fuels. “The price is passed down to us.”
How much higher gasoline prices will go is a matter of guesswork.
In the last America’s Research Group poll, about three-quarters of Americans surveyed said they were shopping less due to rising gas prices.
California has the highest gas prices in the continental US. In California, the state average for a gallon of unleaded regular gas is $4.06. The average price for diesel fuel in California is $4.42.
Wyoming has the lowest gas prices in the country, where unleaded fuel is currently $3.41 per gallon. Hawaii has the highest prices in the US, where the average price for a gallon of unleaded is $4.31.