Gasoline price is heading for $4/gallon

New forecasts are downright inflationary

By Tom Stundza -- Purchasing, 2/27/2008 11:44:00 AM

Gasoline prices have risen to an average $3.14/gallon (regular unleaded) this month, up from $2.23 a year ago, according to Purchasingdata.com, with the New York Times saying some experts fear they could hit $4/gallon by spring. The national retail price has jumped a dime since last month. Energy specialists predict that as demand picks up further this spring and summer, retail prices will surpass the high of $3.23 a gallon set last Memorial Day weekend.

The Energy Department’s latest forecast suggests gasoline prices should peak near $3.40 this spring and match the inflation-adjusted record price for gasoline that was reached in early 1981. However, many non-government economists foresee a sharper spike as refiners come out of the seasonal maintenance period and start producing summer-grade gasoline in March and April.

Tom Kloza, chief oil analyst at the Oil Price Information Service tells the New York Times there could be a “big jump” this summer so prices would peak around $3.50 to $3.75 nationwide. Geoff Sundstrom of AAA, the automobile club, says that $4/gallon gasoline is possible this summer. “We’ve gone from a worrying situation for gasoline to one that is quite alarming,” Sundstrom says.