Gas could average $3 by Christmas

AAA's daily tracking of US retail pump prices puts the national average higher than that in many markets.

By Charley Blaine Dec 16, 2010 9:48PM

Gas prices © moodboard/CorbisHere's a little gift for everyone this holiday season. The national average price of gasoline may hit $3 a gallon just in time for Christmas.

The national average was $2.984 Thursday, unchanged from Wednesday, according to AAA's Daily Fuel Gauge report. It's up 13.5% this year and has been rising a bit less than a penny a week. The national average is up 4.6% this month.

It's also up more than 80% since bottoming at $1.618 a gallon on Jan. 1, 2009.

The national average is just that. Fact is, gasoline has already topped $3 a gallon in many markets. It was averaging nearly $3.30 a gallon in the Long Island suburbs of New York.


True, the price of gasoline is not yet at a record -- yet. AAA's all-time high was $4.114 on July 17, 2008; it then dropped 61% by the end of 2008.

But gasoline also hasn't been above $3 a gallon on Christmas Day before. It nearly did hit that level in December 2007, however.

The ostensible cause of gasoline's rise is rapid economic growth outside the United States. Perhaps, too, is a reviving economy in this country.

One sign of a reviving economy is that sales of gas guzzling vehicles are strong. Passenger car sales are up 5.9% this year; minivan, pickup and sport-utility vehicle sales are up 18%.

The top-selling U.S. vehicles this year are  the Ford F-150 pickup and the Chevrolet Silverado.

There has been tremendous speculation in crude oil via the U.S. Oil Fund (USO) and other exchange-trade funds and by hedge funds and other in futures trading.

Another cause is supposed to be the falling dollar.

This may not be true. The U.S. Dollar Index, which measures the dollar against a basket of currencies, is up 3% for the year. It was up as much as 13% against major currencies in June. It was never down more 3%.

While it is true that the dollar index has declined by about one third since 2001, most of the decline occurred between 2001 and 2007. The dollar index is up 5% since the end of 2007 and down 2% since the end of 2008.

6Comments
Dec 24, 2010 11:59AM
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And what is the reason now? too much oil , not enough oil, the refineries closed. Ok, now its that the worlds using more oil and that we stupid americans are buying gas guzzling suvs. whats next. I think its the holidays and the Coes of the oil companies need extra cash to spend. Now thats just my thought which to some people may sound stupid. but when you drive past a gas station every day and see a different price (considering that oil is already paid for) then something is not right! 
Dec 22, 2010 6:06PM
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What did you expect? No oil drilling! Printing monopoly money! I will wait until the Dow hits 6000 again and it will. Then I will be rich with play money.
Dec 18, 2010 3:11PM
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Oh my! Not $3.00 a gallon. I wish. Just filled up yesterday at $3.30 a gallon for regular unleaded. I guess we are a little ahead of our time here in San Diego.
Dec 17, 2010 12:53PM
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If you got the futures traders out of the picture... gas would be about 60 cents a gallon cheaper!!!

Bend over and get filled up!!!!!

Dec 17, 2010 9:16AM
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supply and demand will push it to that $4.00 price; that's the excuse they love to use as the change over from summer to winter gas has been done!

 

daily show proved it once again that washington folk have no vertebrae!

Dec 16, 2010 11:01PM
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Can $4.00 per gallon be far behind?  This should really kill the recovery.
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