The price for a gallon of gas has topped $3 on the West Coast and Northeast, and drivers in other parts of the U.S. are seeing prices just under the $3 mark. That is despite lower demand in North America and in Europe.
The reason for higher prices at time of high supply and low demand is because of speculation on Wall Street. If motorist are not seeing $3 per gallon already, prices are expected to rise with the exception of any drop in crude oil prices, in accordance to a new survey.
“It’s all about investor optimism, and that’s been the story about 2010 … that’s the primary reason why we’re seeing oil prices at $90 (a barrel) and gasoline making an uncharacteristic climb in December towards $3 a gallon,” said Troy Green, a spokesman for the AAA Motor Club, a group that monitors gasoline prices around the nation.
AAA’s research shows that the national average for a gallon of regular unleaded gas was $2.968 in the middle of last week. That’s an 11 percent increase from a month earlier and 33 cents per gallon than a year ago. The increase means the average driver is paying $1.65 more to fill up the than a month ago and $4.95 more than at this time last year.
Prices are even higher on the West Coast, where the Energy Department reported the average price per gallon at $3.15. If oil prices continue to go up and reach above $100 a barrel in 2011, as some economist predicts, it could hamper efforts by President Barack Obama and the Federal Reserve to bolster the struggling economy.
“I think we’re at that point. With (nearly) 10 percent unemployment, it is a much more impoverished consumer that cannot afford it. It’s almost a bludgeoning instrument in terms of what it will do to consumer sentiment,” said John Kilduff, a veteran energy analyst. “What might have been a very bright shopping season could get the wind taken out of its sails by these high prices.”