The national average for a gallon of regular gasoline topped $3 a gallon on Thursday, just in time for the holiday driving trips millions of Americans will take this week.
The average pump price rose about a cent and a half a gallon overnight, to $3.01, according to AAA, Wright Express and Oil Price Information Service. That's 14 cents more than a month ago and 43 cents higher than a year ago. It's the first time ever that the average retail price has been above $3 a gallon at Christmas.
A recent study from business management firm PortiaGroup, using data from OSIP, says consumers will likely pay about $1.35 more a gallon during the 12 days of Christmas (from Dec. 25 to Jan. 6) than during the same period of 2008-2009.
The rising price of crude oil has been pushing up the price of gasoline for the past month, and the trend continued Thursday. Benchmark crude rose 78 cents to $91.26 per barrel on the New York Mercantile Exchange in midday trading. That's the highest point in two years.
Optimistic economic news helped push oil prices higher on Thursday. The Commerce Department said that consumers spent more in November than the month before. And the Labor Department said that the number of people applying for unemployment benefits for the first time fell by 3,000 last week to 420,000. Investors hope that an improving economy will mean increasing demand for oil and gas.
The PortiaGroup-OSIP study says gas pump prices are taking a bigger bite out of household spending: an average 7.4 percent of median household income compared with 6.5 percent last year and 4.2 percent in 2008. If the pattern of higher oil prices persists, the average share of income spent on gasoline could rise to almost 10 percent by spring, with pump prices around $3.75 or more a gallon.
While gasoline prices are climbing, the price of one of the main heating sources in the nation — natural gas — is falling. It's down about 11 percent in the past two weeks. On Thursday natural gas lost 6.4 cents at $4.088 per 1,000 cubic feet on the Nymex.
Much of the nation has shivered through below-average temperatures in December, and on Thursday the Energy Department said the nation's natural gas supplies shrank last week by 184 billion cubic feet. But there is so much natural gas in storage — almost three and a half trillion cubic feet, or more than 8 percent more than the five-year average — that prices have stayed relatively low.
Some weather forecasters think winter's icy grip will ease next month, which could keep natural gas prices down. "Slightly decreased heating demand in January is expected along a large swath of the country from Texas through the Mid-Atlantic region and north into New York and New England," said Chris Kostas, senior power and gas analyst with consultants Energy Security Analysis Inc.
"The softer-than-normal power demand should also reduce gas demand for power generation along the East Coast in January," Kostas added. Natural gas is used to generate about 20 percent of the nation's electricity.
In other Nymex trading, heating oil rose 1.55 cents to $2.5440 per gallon and gasoline gained 0.75 cent at $2.4320 per gallon.
In London, Brent crude rose 63 cents to $94.28 on the ICE Futures exchange.
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