Gasoline Prices At $4.25 A Gallon By April?

The pain at the pump in the Philadelphia area continues as gasoline prices rose 6 cents in the past week, says AAA. But the worst is yet to come.

Industry experts said on Monday that on a national basis, gasoline prices have never been higher this time of the year. And gasoline prices could hit a record level in April.

There was also news on Monday that oil prices were at a nine-month high after Iran said it halted crude exports to Britain and France in an escalation of a dispute over the Middle Eastern country's nuclear program.

The Philadelphia (5-county) area gasoline average was at $3.66 on Monday, up a penny over the weekend., while the South Jersey gas average was at $3.49, up 4 cents in the past week.

Delaware gas average was at $3.58 on Monday.
Some experts say prices could reach a record national level of $4.25 a gallon by late April.

"You're going to see a lot more staycations this year," says Michael Lynch, president of Strategic Energy & Economic Research. "When the price gets anywhere near $4, you really see people react."

The Oil Price Information Service predicts that gasoline could peak at $4.25 a gallon by the end of April. That would top the record of $4.11 in July 2008.

The national average for gasoline began the year at $3.28 a gallon. The average price for February so far is $3.49 a gallon. That's up from $3.17 a gallon last February, a record at the time. Back in 2007, before the recession hit, the average for February was $2.25 a gallon.

The surge in gas prices follows an increase in the price of oil.
Higher gas prices could hurt consumer spending and curtail the recent improvement in the U.S. economy.

Gas prices are already an issue in the presidential campaign. Republican candidate Newt Gingrich spoke several times this week about opening up more federal land to oil and gas drilling as a path toward U.S. energy independence — and lower pump prices.

"Our goals should be to get gasoline to $2.50 or less so that working families can actually get to work and retired families can travel," Gingrich said at a campaign event in Los Angeles Thursday.

High oil and gas prices now set the stage for even sharper increases at the pump because gas typically rises in March and April.
Every spring, refiners suspend operations to switch the type of gasoline they make. Supplies of wintertime gas are sold off before March, when refineries need to start making a new formula of gasoline that's required in the summer.

That can mean less supply for service stations, resulting in higher gas prices. And summertime gasoline is more expensive to make.

The government mandates that it contain less butane and other cheap organic compounds because they contribute to the formation of ground-level ozone, a primary constituent in smog. That means more oil, a costlier component, is needed to produce each gallon.