Consumers for the first time this year are paying more on average for a gallon of gasoline than they did 12 months ago, according to data released Tuesday.
The rising price of crude oil, which closed Tuesday at $79.55 a barrel, is putting pressure on gasoline prices.
The national average gas price has increased 6.8 percent during the past four weeks from $2.504 per gallon to 2.675 per gallon, according to AAA. The average gas price in Northwest Indiana is $2.683 a gallon, according to AAA. The average gas price in Chicago is $2.859.
Prices a year ago were $2.668 a gallon. At this time last year, however, gasoline prices were falling fast as the financial crisis on Wall Street spread to Main Street.
Patrick Dehaan, a petroleum analyst at GasBuddy Organization Inc., which tracks gasoline prices nationwide, said gasoline prices in the Chicago area are higher than the national average because there is little competition coupled with higher taxes. Gasoline taxes in Indiana are 50.1 cents a gallon. Gasoline taxes in Illinois are 57.9 cents a gallon and the city of Chicago adds another 12.75 cents.
"The cost of doing business is certainly a lot higher and they're passing on the higher cost to consumers," Deehan said.
James Beck, a petroleum expert at the Energy Information Administration., said the rising price of crude, which spiked roughly three weeks ago, is reflected in the increasing prices at the pump.
"The No. 1 factor pushing up the price of gasoline is the price of crude," he said. "Crude prices affect two-thirds of the price of gasoline. If crude goes up significantly you start to see gasoline go up."
Argus Research analyst Phillip Weiss said that the rising price of crude is driven largely by a weak dollar. Since crude is traded in dollars, investment in crude oil increases when the currency is weak.
The rising price of crude runs counter to economic fundamentals, Weiss said.
The abundant supply of crude coupled with weakening demand would typically drive down the price of crude.
"One of the big factors pushing up the price of gasoline is that more people are looking to oil as a financial asset and are willing to hold it in that form," he said.
Allen Good, a Morningstar Inc. analyst, noted that the rise in gasoline prices will soon be seen at the pump.
"The price of gasoline will go up in the next couple of weeks because there is generally a lag," he said. "Also refiners are cutting back, so you'll see a dent in supplies, which will cut into higher prices."
Dehaan said that there is a battle between weakening demand at refineries and spiked demand stemming from the perception of an improving economy.
"We keep seeing notable companies on the Dow Jones making earning reports that are really positive and that spurs traders to think that the economy's on the mend, even though there is kind of a conflicting picture with what's really going on," he said.
The Associated Press contributed to this report.
Please Wait…