Gas could average $3 per gallon by Christmas, analysts say

The Sacramento BeeDecember 7, 2010 

Just in time for Christmas in California: Gasoline at $3.50 a gallon.

It could happen, according to analysts, who say they are startled at spiking crude oil prices driving up the cost of gas at the pumps.

Blame it on multiple signs of an improving economy worldwide, with speculators pouring money into the oil market and sending the price of crude near $90 a barrel, after weeks in the low $80s.

"Demand (for gas) is up just slightly and supplies are down just slightly compared with this time last year, but in the grand scheme of things, the economic road to recovery is driving this," said Patrick DeHaan, senior petroleum analyst for GasBuddy.com.

DeHaan said "there's a bullish sentiment that demand will continue to rise, and a lot of speculators are jumping into the market."

The average retail price of gas in the Sacramento area rose 7.3 cents to $3.17 per gallon over the past week, according to Monday's weekly report by SactoGasPrices.com, a GasBuddy.com website. The local increase came a week after the average at-the-pump price declined 1.3 cents.

Sacramento-area gas prices are now 37.4 cents per gallon higher than they were a year ago and 8.9 cents more than last month.

The story was the same nationwide.

GasBuddy.com said the average price spiked 8.4 cents to $2.94 a gallon over the past week. The national average has increased 9.2 cents since last month and is 30.2 cents higher than this time last year.

If trends continue, the national average could hit $3 a gallon by Christmas.

To read the complete article, visit www.sacbee.com.

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