Gasoline prices rose more than 7 percent in January, which typically is one of the slowest driving months of the year. That is leading experts to predict pump prices may surge past last year's record highs when highway travel picks up late in the spring.
Government figures show that the average price of regular unleaded gas has risen in each of the past four weeks, jumping to $1.91 a gallon in the week ended Jan. 31 from $1.78 at the start of the year. That is more than 30 cents a gallon higher than a year earlier. Prices are highest on the West Coast, averaging $1.99 a gallon and lowest in the Rocky Mountain region, averaging $1.83 a gallon.
Last year, the average price peaked above $2 a gallon in May, just before Memorial Day, which is the unofficial start of the summer driving season. To be 10 cents short of that level in early February is not good news, analysts said.
Carl Larry, head of energy futures at Barclays Capital in New York, predicts that retail gasoline prices will rise above last year's peak because of rising demand for fuel and the higher price of crude oil, from which gasoline is refined.
"We're starting to see the economy come back, so demand can only go higher from where it's at," Larry said.
Over the past four weeks, nationwide demand for gasoline is up 1 percent at 8.8 million barrels, according to the latest U.S. government data.
Crude oil futures are about 40 percent higher than a year ago, hovering at almost $47 a barrel, as fears of supply disruptions in Iraq and possible terrorist attacks in the Middle East make traders reluctant to bet on lower prices, given strong global demand and a thin supply cushion.
Tom Kloza, director of Oil Price Information Service in Lakewood, N.J., said he anticipates the price of gasoline to "rocket higher in the next 90 days." Nationally, Kloza predicts average gasoline prices could surpass $2.15 and even run as high as $2.50. That said, he expects those highs to be short-lived.
BNP Paribas Commodity Futures broker Tom Bentz said there is an ample supply of gasoline at the moment and that gasoline prices could very well fall from current levels. However, "a lot of refiners are going to start cutting back production as we head into the summer season and so things will eventually heat up a bit," Bentz said.