If you dumped your old Hummer for a Scion IQ, you're in luck. For the rest of us, the news that Iran will cut exports to Britain and France, has made that summer road trip a lot less enticing. In a reaction to the news, the price for crude oil jumped nearly 2 percent to $105.08 for April. At the same time, the average price for a gallon of regular has been slowly ticking up since last fall, and hit $3.57 on Monday, up 25 cents since the beginning of January. With the high gas prices of spring and summer coming up, the price rise isn’t likely to slow down anytime soon.
Tom Kloza, the chief oil analyst at Oil Price Information Service, predicts a national average of $4 to $4.25 per gallon by April and will likely break the previous record of $4.11 a gallon in July 2008. Other experts say prices could reach $5 per gallon by this spring in some parts of the country. For drivers in California, Alaska and Hawaii, the states with the most expensive prices, average price per gallon is already over $4.
Gas prices vary across the country for a variety of factors, including distribution costs and distance from refineries, but the main reason is taxes. The nationwide federal gas tax is 18.5 cents, and states have an excise tax that’s anywhere from a few cents to over 20 cents, plus some states tack on a additional sales tax. On top of that, some county and city governments have their own sales tax. In California, gas taxes can be as high as 66 cents a gallon.
The effects of higher gas prices can trickle down to virtually all sectors of consumer spending – from food prices to household energy spending, to construction costs. According to some estimates, for every penny increase in a gallon of gas, consumer spending in other areas can decline by as much as one billion dollars.
Typically April is when gas prices spike, due to government mandates that require refiners to switch to a formula with less butane and more crude oil in order to cut down on smog and pollution during the high traffic summer months – but the formula is more expensive to produce. Today’s price of $3.57 per gallon is the highest it’s ever been in February.
To help plan your summer vacation, we put together a list of the 10 U.S. cities with the cheapest gas prices according to GasBuddy.com – because no one wants to go where the $5 gallons are.