WASHINGTON — Just what Americans need as they try to dig out from the Great Recession: Gas prices headed back to $3 per gallon.
The average national price of a gallon of regular hit $2.70 on Thursday, according to AAA. The price of gasoline is up 67 percent from this time last year and at its highest level since October 2008.
Why are prices rising even as demand for gasoline is falling? Current demand is well below levels seen in recent years. Oil refiners are actually trimming production. The crudest explanation, so to speak, is that the price of gas is following the price of oil upward. Oil, like all commodities, has been rising, pushed north by increased demand and a weak U.S. dollar.
The global economy has been improving for the past six months, and more activity means more demand for oil, driving up prices. Another factor may be that the prospects for growth are attracting speculators who are bidding up oil prices. At the same time, the Federal Reserve printed billions of new dollars in its efforts to combat the financial crisis, devaluing each dollar in circulation, which may be contributing to the runup in commodity prices.
