The U.S. Energy Department's Energy Information Administration projects that regular-grade gasoline retail prices will rise to an average $2.92 per gallon in 2011.
"I can see it easing up to the $3 range between now and Christmas," said petroleum analyst John C. Zehler Jr. "We are seeing $3 prices in some parts of the country."
Yesterday, regular unleaded gas was selling for an average of $2.69 a gallon in Richmond, up 1 cent from Friday and 15 cents from more than a month ago, AAA Mid-Atlantic said.
"Tradition says that prices usually stay fairly stable at this time of year, but crude is often tied to the larger economy and the stock market," said Michael J. O'Connor, president and CEO of the Virginia Petroleum, Convenience and Grocery Association in Henrico County.
With such factors in mind, Zehler said, he still sees oil capable of "ratcheting up into fresh highs during the next few sessions with values ultimately advancing toward the $87 [a barrel for crude oil futures] area by month's end."
Crude oil futures rose $1.83 to settle at $83.08 per barrel yesterday.
In Virginia, the average price for a gallon of unleaded regular was $2.72 yesterday, AAA said, up 1 cent from Friday and 14 cents from a month ago. Meanwhile the national average was $2.83, unchanged from Friday but 9 cents higher than a month ago.
"Gas prices continue to be affected by the recent surge in crude oil prices," said Martha M. Meade, manager of public and government affairs for AAA Mid-Atlantic, which has nearly 835,000 members in Virginia.
But, Meade said, "barring any significant events there will not be a sizeable increase for consumers for the remainder of the year."
"It doesn't really have a whole lot to do with the supply of petroleum," said David Walsh, president of Woco Oil Co. Inc., a Mechanicsville fuel wholesaler. "It has more to do with the financial markets."
"I think you'll see a lid on prices here shortly," Walsh said. "Prices of gasoline could go into the $2.70s, but I'd say that, at this point, that's the peak."
The jump of gas prices since the beginning of the month traces to the dollar's weakness in international currency markets.
"The price run-up during the past month has had little to do with shifts in the supply [and] usage balances," said Zehler, president of Virginia Fuels Inc., a wholesale gasoline and distillate distributor in Mechanicsville.
Economist Steve H. Hanke explained, "The price of dollars is what drives the price of oil around."
When the value of the dollar falls, the dollar prices of internationally traded commodities -- like oil -- increase because more dollars are needed to buy the same amount of the commodity, said Hanke, a professor of applied economics at Johns Hopkins University in Baltimore and a senior fellow at Washington's Cato Institute.
"As long as crude oil prices stay higher, " said Windy VanCuren with AAA Mid-Atlantic, "you can expect pump prices to stay higher."
