With oil futures skyrocketing, some analysts are concerned the price of gas could end up reaching as high as $4 a gallon by spring. It's also not looking good for diesel, as it's hitting record prices almost daily.
Today diesel hit $3.60 a gallon, up almost a dollar over the $2.62 it was last year at the same time.
Another factor in the price increase is the seasonal changeover from the gas blend used in winter to the blend used in the summer, which is more expensive than the winter blend.
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The increases could not come at a worse time for the economy. With growth slowing, high energy prices that were once easily absorbed by consumers are now more likely to act as a drag on household budgets, leaving people with less money to spend elsewhere. These costs could exacerbate the nation's economic woes, piling a fresh energy shock on top of the turmoil in credit and housing.
Seasonal changeover cited as one catalyst for increase
Economist Severin Borenstein of the University of California Berkeley said he would not be surprised to see the statewide price top $4 this year. But he said that a more likely peak price would be between $3.60 and $3.75 – still a record high.
Gasoline prices typically rise at this time of year, as refineries transition to a more expensive summer blend of gas. This year, Friday is the deadline for putting the summer blend onto the market, meaning that refineries began changing to the blend in mid-January, leading to an increase in price.
Pain At The Pump As Gas Prices Rise
Last week's new record prices were caused by high wholesale barrel of oil which spiked over $100, along with reduced U.S. refinery output and anticipation of the seasonal switch over to spring blends from current cold weather formulations.
Places you can get current gas prices and information:
Weekly U.S. Retail Gasoline Prices, Regular Grade
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