Gas prices, still climbing, are now just one thin dime from $4 a gallon
Gas prices jumped 5 cents a gallon last week on average, says AAA's Fuel Gauge Report, even as oil prices stabilized a bit. When gas prices reach $4 a gallon, motorists begin to change their habits.
Gas prices were only 10 cents away on Monday from moving to a national average of $4 a gallon.Skip to next paragraph
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Over the past week, the price of fuel rose another 5 cents a gallon and is up 23 cents a gallon from a month ago, according to AAA’s Fuel Gauge Report.
Economists consider the steady increase in gas prices to be a threat to the economy, because consumer confidence erodes as people have less money in their pockets after they pay their gasoline bills. Although the price of gasoline has hit $4 a gallon before, that's the level at which some motorists begin to change their driving and buying habits, polls show. If average price of gasoline reaches $4 a gallon or breaks the past record of $4.11 set in July 2008, it is also likely to result in more rhetoric from the presidential candidates.
“There is a lot of frustration that motorists are feeling in their pocketbooks,” says Avery Ash, manager of government affairs for AAA in Washington. “If the average driver uses 90 gallons of fuel a month, it is now costing an extra $12.60 for gasoline” compared with last month.
Although gas prices continue to rise, the price of oil has steadied somewhat. On Monday, the price of West Texas Intermediate hovered at about $107 a barrel, close to the level as it has been for a few weeks.
A main reason the price of oil has remained high is concern over conflict with Iran. Oil prices spiked last Friday in after-hours trading amid rumors that military action in the Middle East was imminent. On Monday, there were rumors about multilateral talks with Iran that might remove some of the tensions in the area, says Phil Flynn, an energy commentator at PFG Best, a commodities brokerage house in Chicago.
“That’s reducing some of the risk premium,” says Mr. Flynn. “If we had a nice peaceful world, we might be hitting the peak in gasoline prices right now.”
Another key reason for rising gas prices at a time when the price of oil is flat is that the nation is currently shifting over to the seasonal summer blends. These cost refineries about 20 cents a gallon more to produce. This added cost is usually tacked on at the pump.