Local

Experts see gas hitting $3 a gallon soon

If you haven't already noticed it at the gas pumps, you will.

Your pocketbook is about to take another hit — gas prices are rising.

Within the past week, gas prices rose 21.2 cents per gallon, averaging $2.55 a gallon in Wichita. That's up 83 cents from last year at this time.

Experts say don't be too alarmed — just yet. Pump prices typically rise this time of year as refineries switch to a summer blend of gasoline, which is more expensive to refine.

"This is when we start to see the gasoline market go higher," said Darin Newsom, a senior analyst with the Omaha-based Internet trading firm, Telvent DTN.

Gas prices traditionally rise from mid-February through the July Fourth weekend, Newsom said.

Experts don't expect gas to hit $4 a gallon like it did in the summer of 2008, but several are predicting it could be above $3 per gallon.

"I'll be surprised if it got over $3.25," said Fred Rozell, retail pricing director at Oil Price Information Service.

But what has analysts most concerned is that with the market on Wall Street still vulnerable, and with so many people unemployed, there hasn't been the demand for gas normally seen, Newsom said.

"It's a little spooky," he said. "We're seeing things we've never seen before. I think the early season buying got ahead of itself. I don't see the fundamentals of supply and demand."

If Wall Street comes under pressure, Newsom said, then gasoline prices could come back down. There will be pressure for that to happen.

But that may not be enough.

Crude oil has been averaging nearly $80 a barrel, dropping to $78.86 a barrel Tuesday on the New York Mercantile Exchange.

Rozell said what's pushing prices higher isn't American consumption. It's the crude oil that's used to make motor fuel.

Crude is an international commodity that's become more expensive as demand grows in China. As crude prices increase, so do gas prices.

Currently the nation's gas refineries are running slightly below 80 percent capacity, said Betty Oliva, spokeswoman for the AAA in Topeka.

Cheaper commodities such as oil appeal to foreign investors, which can also drive the price up, Oliva said.

"If oil prices show strength, we can expect this trend to continue," she said. "If demand goes up, that will also drive the prices."

And, if the price per barrel rises higher, gas prices will rise.

"It is good to be concerned," Newsom said. "I don't think we will get up as high as in 2008, but it could get up to the $3.40 range."

Related stories from Wichita Eagle

  Comments