After Slow Rise, Gasoline Prices Suddenly Escalate

December 7th, 2010 by Staff

Source: ConsumerAffairs — The price of gasoline seems to have pressed the accelerator to the floor since the weekend, rising nearly a dime a gallon in the last seven days, according to the AAA Fuel Gauge Survey.

The average price of self-serve regular today is $2.951 a gallon, up a nickel a gallon since Friday. The price is 32 cents a gallon more than at this time last year. Sixteen states now have average gas prices that exceed $3 a gallon.

Analysts say prices at the pump are simply responding to the price of crude oil, which nearly broke through the $90 a barrel level early Monday. Crude oil is rising, they say, on the outlook for a weaker U.S. dollar, which is how energy products are priced.

Many attribute the dollar’s weakness to the Federal Reserve’s Quantitative Easing program, which is designed to keep interest rates low. Fed Chairman Ben Bernanke appeared on CBS’ 60 Minutes Sunday, where he defended the policy and did not rule out another round of easing if the economy fails to respond.

Ironically, the dollar is showing very little weakness at the moment, gaining ground Monday against the euro. Many traders say oil prices will go even higher if and when the dollar begins to retreat.

For consumers, meanwhile, the increase in energy prices comes at a time when they normally expect to pay less for gasoline because of reduced demand. At the same time, home heating costs are continuing to rise, since demand for heat is up as winter-like weather begins to take hold in many parts of the country.

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