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Gas Prices Hit New High of Nearly $3.20 a Gallon

U.S. average retail gasoline prices have reached a new high of almost $3.20 per gallon and will likely jump another 20 to 30 cents in the next month as refiners become more willing to pass on their higher costs of crude oil, according to an industry analyst on Sunday.

Gas Pump
Mark Lennihan
Gas Pump

The national average for self-serve regular unleaded gas was nearly $3.20 a gallon on March 7, up about 9.44 cents per gallon in the past two weeks, according to the nationwide Lundberg survey of about 7,000 gas stations. The price has risen 64 cents per gallon in the past 12 months.

"The price increase was entirely due to the higher costs of crude oil," said survey editor Trilby Lundberg.

Although the latest price represents a nominal all-time high, when adjusted for inflation it is a smidgen below the the record of $3.18 per gallon reached on May 18, 2007, Lundberg said.

Lundberg said more pain for drivers is on the horizon, with prices at the pump likely to rise 20 to 30 cents per gallon in the next month as refiners begin passing on to customers more
of their higher costs for crude oil.

"Should prices indeed rise 20 to 30 cents, they would vastly exceed previous prices on an inflation-adjusted basis," Lundberg said.

Refiners since last spring have deliberately refrained from passing on their higher costs for crude oil, in order to compete for sales, she said.

"But refiner profit margins have become so slim that they will now raise prices to recover their lost margins," said Lundberg. Likewise, she said retailers will also be less willing to hold back from passing on their higher costs to drivers.

Moreover, prices will also rise because of the return to daylight savings time and the approach of warmer weather, Lundberg said.

At $3.58 a gallon, the San Francisco Bay Area had the highest latest average price for self-serve regular unleaded gas on March 7, while the lowest price was $2.95 in Cheyenne, Wyoming.

The average U.S. diesel price was $3.80 a gallon in the latest survey, up 22 cents a gallon from two weeks ago, and $1.02 higher than this time last year.