In depth

Discussion Forum

Gas prices recently reached another record high, jumping about 12 cents over the last two weeks.

AAA says the current average for regular fuel is $2.11 per gallon, up from $1.89 last month and $1.74 last year. Mid-level gas has gone from $1.84 to $2.24 in the last year, and premium has jumped from $1.91 to $2.32.

Many analysts predict prices will continue to rise. Part of the problem is supply and demand, said Michael Smitka, a professor of economics at Washington and Lee University. The U.S. is still growing, and more and more Americans are purchasing larger cars that use more gas, but the amount of fuel in the U.S. isn’t necessarily increasing to meet demand.

An attendant changes gas prices at a

gas station in San Rafael, Calif. (AP)

Seasonal factors such as an unusually cold winter can also drive prices up. Changing fuel inventory is hard  for fuel suppliers, so a higher demand for fuel can mean higher prices even if international oil prices don’t change, Smitka said.

Trilby Lundberg, publisher of a semimonthly survey of 7,000 gas stations across the country, believes prices will continue to rise because of the transition to cleaner-burning gasoline mixtures for the approach of summer. People also tend to drive more in the summer, Smitka said, adding that the process of increasing the amount of gasoline from a gallon of oil is more costly.

Gas pump price hikes are caused partially by a tighter oil supply from Iraq, a CNN article said. When the war started two years ago, people anticipated a higher oil output once Saddam Hussein was overthrown, but attacks on oil fields and refineries have caused less oil to leave Iraq than when the war started. The article said in 2003 about 2.5 million barrels left Iraq each day, whereas now output is fewer than 2 million barrels.

According to the Lundberg Survey released Sunday, average retail prices for all three grades of gasoline increased 12.74 cents between March 4 and March 18. The latest price increase is the highest since May 21 when prices hit a previous record of $2.10, said Lundberg.

New Jersey has the lowest gas prices with an average of $1.94 per gallon, and California and Hawaii have the highest prices with $2.36 and $2.43 per gallon. Virginia is on the low end of the national average with $2.04 per gallon.

President Bush expressed concerns over rising fuel prices last Wednesday, saying he hopes lawmakers will create a bill encouraging conservation. He also expressed the hope that alternative sources of energy will be used more in the future.