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Gas prices keep climbing, but analysts say a peak is near

It's hot. School's out. The kids are getting restless.

So you pack up the family car for a weekend road trip, swing by a gas station and … groan.

Gas prices. Ouch. Here we go again.

While we're not hurting as badly as we were a year ago, when a gallon hovered around $4, we're noticing the price seems to climb every day, which keeps us from wanting to hit the road.

The average price in Florida increased 11 cents in the past week alone, 41 cents in the past month.

Prices have gone up so much that demand is down, even from what it was during last year's record-breaking prices. The Energy Department reports that U.S. demand is down 0.4 percent from last year, when it was also down from the previous year.

So if demand is down, why, oh, why does gas cost so much?

There are many, many reasons, said Gregg Laskoski, AAA Auto Club South's public relations director. And most of them have little to do with supply and demand.

One reason: Oil refineries just went through the arduous process of switching from "winter blend" gas to "summer blend," Laskoski said. Federal law requires oil companies to dispose of their winter reserves to make the cleaner-burning and slightly more expensive summer gas by May 1. This temporarily causes a dip in supply.

But the effects of that should be behind us, Laskoski said. What we're mostly dealing with now is investor speculation that the value of crude oil will continue to climb, putting upward pressure on the price.

Also, when the value of the U.S. dollar is low and the euro is high — that's the situation now — more investors pour their money into commodities, including crude oil. This further raises its value, driving up the price at the pump.

The good news: Analysts believe the end of this price hike is near, and it won't get anywhere close to last year's highs. Crude oil closed at $68.44 per barrel on Friday, and oil analysts expect the rally to peak at $70 to $80 — well below the $147 per barrel in July 2008 — before prices fall again.

"They also expect prices to peak earlier this year, sometime in June rather than mid to late July," Laskoski said. "Then we should see the prices flatten out."

The good news for your pocketbook: The worst is likely over. While the average price of a gallon in Florida shot up 50 cents in the last month, we likely will be paying less by late summer.

Some will groan more than others, Laskoski said.

"People who are extremely budget conscious, or people on fixed incomes, they are going to feel this," Laskoski said. "Even there, though, we don't think that people are going to cancel their vacation plans. They just may choose to stay a little closer to home."

Luis Perez contributed to this story. Emily Nipps can be reached at [email protected] or (727) 893-8452.

Climbing gas prices

Current average
Florida -- $2.586
National -- $2.613

One week ago
Florida -- $2.477
National -- $2.502

One month ago
Florida -- $2.176
National -- $2.169

One year ago
Florida -- $3.962
National -- $3.988

Source: AAA Daily Fuel Gauge Report

Gas prices keep climbing, but analysts say a peak is near 06/08/09 [Last modified: Wednesday, June 10, 2009 11:03am]
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