Gas prices are at an all-time high with six weeks to go before the summer driving season officially launches. And they are expected to go even higher.
The average price of gasoline is $3.84 per gallon, up 98 cents from a year ago and 5 cents from the previous week, according to the Department of Energy. That is the highest price for April since the data was collected in 1990. The last time gas rose higher than $3.50 was Sept. 29, 2008, when the weekly average hit $3.63. The last time gas was below $3 a gallon was Dec. 20, 2010 at $2.98.
"We're starting to see a little speculation by the gas companies, the retailers," said Charles Dewhurst, national energy practice leader with BDO. "They're already looking ahead to peak vacation season, which kicks off Memorial Day, which isn't very far way now."
Memorial Day is on Monday, May 30, this year, and Dewhurst said high gas prices are going to continue to affect everything from the pump to the grocery store. He said gas retailers, or "typical household names on the street corner" including Chevron, Exxon and Shell, will likely see greater profits as a result of the price increase.
"They're also anticipating the prices increases will stay in place if not increase more once we get into peak vacation season," Dewhurst said.
The hike in gas prices is correlated with the continued spike in oil prices. Light, sweet crude oil futures settled at $107.12 a barrel today, lower than Friday's settled price of $109.66.
Concerns about limited oil supplies from the Middle East are continuing to drive the spike in prices, Dewhurst said.
"There is supply interruption in Libya and continuing potential for more disruption elsewhere in the Middle East," he said. "That is the biggest worldwide event we're dealing with."
Saudi Arabian Oil Minister Ali Naimi said Sunday the global oil market is oversupplied, making it unlikely that OPEC will increase its oil output, which could have helped decrease prices, according to the official Saudi Press Agency.
Weakening U.S. Dollar and Other Factors May Lead to More Pain at Pump
Another factor contributing to high gas prices, in addition to speculation from gas retailers and supply concerns from the Middle East, is the weakening dollar, which has becoming less valuable in exchange rates for the past month, Dewhurst said.
"What that means is, when we're buying foreign oil, our currency is worth less so we have to pay more to buy oil," he said. "So we're suffering high gas prices partially because the dollar is weakening."
All of these factors lead to concerns that consumers will not just be hit at the pump, but higher prices through a variety of purchases.
"Much of what we buy at grocery store is transportation and delivery, which is pushed up by high gas prices," Dewhurst said. "There's a trickle-down effect into food prices and shipping, like FedEx. It starts impacting all aspects of our lives, really."
More importantly, Dewhurst said, continuing higher prices could derail the country's economic recovery. The Labor Department reported earlier this month that the national unemployment rate is at a two-year low of 8.8 percent for the month of March.
"This has been going on now for over a month," Dewhurst said, referring to increasing oil and gas prices. "We do have promising signs in the U.S. economy, but if gas prices get higher, there could be danger signs there."