Gas Prices See Highest March Price Ever and 7th Consecutive Weekly Increase

March 28, 2011 — -- The weekly national average gas price showed the highest price ever during the month of March and the seventh consecutive increase this week, according to the Department of Energy. Prices are at their highest level since 2008, in part because of the Japan earthquake and turmoil in the oil-producing Middle East. But analysts say the price of oil and gas would still hover at a surprisingly high level despite geopolitical concerns.

The national average gas price is $3.60 today, according to the Department of Energy, up 3 cents from a week ago and 80 cents from one year ago. Last week's national average was an updated $3.56 per gallon for regular gas, the 13th consecutive week that the average was above $3 a gallon, according to the DOE. The last time gas rose higher than $3.50 was Sept. 29, 2008, when the weekly average hit $3.64.

Oil futures settled today at $103.98 after reaching a high of $105.76 earlier in trading. On Friday, oil futures settled at $105.40 a barrel, the third consecutive day above $105, according to the Chicago Mercantile Exchange Group.

Robert Powell, a Middle East analyst with the Economist Intelligence Unit, estimates that even without the current conflicts in countries including Syria, Yemen, Bahrain and Libya, oil would still hover around $90 a barrel. Why? The simple rules of supply and demand, he said.

"The fourth quarter of last year was pretty robust globally," Powell said.

The Commerce Department Friday announced that the U.S. economy grew more quickly than first believed. Gross domestic product in the U.S. grew at an annualized rate of 3.1 percent, revised from 2.8 percent.

Charles Dewhurst, national energy practice leader at BDO, agrees with Powell that without the recent global events, oil prices would be around $90 a barrel. He points to events in Libya and Japan, in particular, as contributors to the high price of oil.

"My perspective is there probably is a $15 price premium right now because of those two events," Dewhurst said. "The Japanese economy is going to need its electric power from oil-based sources as a backup to their nuclear problems. Their demand for oil has already increased."