A cafe latte from Starbucks or a gallon of regular gasoline? That?s the choice consumers might soon have to make during their morning commute.
Just a month ago, a gallon of regular in the Baltimore area cost about $2.93, according to AAA?s Daily Fuel Gauge Report.
Today, it would be tough for drivers to find anything cheaper than $3.13 a gallon.
“People are using change sometimes to buy their gas,” said Mohammed Sayeed, a gas dealer at a Texaco gas station in Glen Burnie, where a gallon of regular cost $3.06 Tuesday.
“I?m still fighting [to maintain good gas prices],” Sayeed said. “It?s affected all merchandise [like food and drinks sales].”
The reasons for the rising gas prices? The weakening dollar, fear of a U.S. recession and violence in oil producing nations like Iraq and Nigeria have driven up the cost of crude oil, said Ragina Averella, public and government affairs manager for AAA Mid-Atlantic.
During tough economic times, investors tend to move investments from stocks and bonds to commodities, particularly oil, which offer a hedge against a falling dollar, Averella said.
So instead of oil prices sliding when the economy is weakening, they?re actually increasing, ultimately leading to steeper prices at the pump.
“It doesn?t look very promising for consumers as far as gas prices,” Averella said.
Oil prices rose as high as $103.95 a barrel Monday, a price many analysts considered to be a record. Oil futures then fell sharply Tuesday, dropping below $100 at times on the possibility that the Organization Petroleum Exporting Countries will boost production and on expectations that crude inventories are continuing to rise.
Justin Paruchi, an oil and gas analyst with Chicago-based market research firm Morningstar, said rising oil prices affect all aspects of the economy.
“Oil is a key input for everything out there,” Paruchi said. “Projects are getting delayed, and companies are finding it costs more to do certain projects.”
With gas prices above $3 a gallon for most of January and February, many analysts have predicted consumers could be paying $4 a gallon in the spring. Averella downplayed that theory, saying oil would have to jump to about $135 a barrel for gas to reach the $4-a-gallon mark.
The Associated Press contributed to this article.
