Gas price likely to reach holiday high

— -- Motorists will probably pay record-high gasoline prices for the Thanksgiving holiday weekend.

Regular gas is likely to average $3.37 a gallon next week — up a whopping 51 cents over last Thanksgiving, according to price tracker GasBuddy.com. Adjusting for inflation, that's about 1 cent higher than 2007's previous holiday high of $3.08.

The holiday record comes even as prices have been falling. Gas averages $3.40 a gallon — nearly 15% below June's $3.98 peak. Most industry watchers forecast further 2011 declines.

"More drops are coming — maybe down to $3.25 — but as we know, prices go down slower than they go up,'' says GasBuddy petroleum analyst Patrick DeHaan.

Tom Kloza, chief analyst for the Oil Price Information Service, says some regions could see prices as low as $2.99 a gallon. Any drop will probably be fleeting. A continued uptick in the economy, seasonal demand and higher overseas consumption could push prices to 2011 peaks by next spring.

"By March or April, you could see Apocalypse II — $3.99 a gallon. Oil prices are usually on a roller coaster, and by then, they'll be on the up cycle, " Kloza says.

Moreover, while retail prices have been easing, crude oil has surged over 25% since September, and Wednesday's 3.2% jump to $102.59 a barrel was the highest close for benchmark West Texas intermediate crude since May. Keeping a lid on prices at the pump: slowing seasonal demand, stubbornly high unemployment and ample supplies.

Even longtime industry experts are stumped about what's been moving prices of late.

"This market isn't sure on any day what it wants to be following. (Wholesale) gas prices. Heating oil. The economy. Greece. The equities markets. We've had just a bunch of crazy situations that don't make a whole heck of a lot of sense,'' says Peter Beutel, head of energy adviser Cameron Hanover.

This year, overall consumption is off 4.4% from 2010. But the AAA, which releases its annual holiday travel forecast Thursday, expects no crimp in holiday driving.

"Thanksgiving is a holiday where the focus is on family. There's that emotional desire to spend time with family and friends that can trump your personal financial situation,'' says AAA spokesman Troy Green. "For a lot of people, it's the only time when they see their families."