NEW YORK – The national average for a gallon of regular gasoline topped $3 on Thursday.
It's the first time that the average retail price has been above $3 a gallon at Christmas. The average pump price rose about a cent and a half a gallon overnight, to $3.01, according to AAA, Wright Express and Oil Price Information Service. That's 14 cents more than a month ago and 43 cents higher than a year ago.
Pump prices have traditionally dropped after the peak summer driving season and into the winter, because fewer people are on the road. This year, however, gasoline prices rose as oil prices climbed from about $80 a barrel in August to more than $91 on Thursday. That's the highest it's been in more than two years.
Analysts think oil and gas prices will rise as the economy gets stronger and demand picks up. But some economists worry that high energy prices could slow the nation's economic recovery. A study by business management firm PortiaGroup says gas pump prices are already taking a bigger bite out of household spending: an average 7.4 percent of median household income this month compared with 6.5 percent in December of last year and 4.2 percent in 2008.
If higher oil prices persist, the average share of income spent on gasoline could rise to almost 10 percent by spring, with pump prices around $3.75 or more a gallon.
Most analysts say oil prices have been rising not because of strong demand and dwindling supplies, but on hopes that an improving economy usually means more demand for oil and gas.
Positive economic news helped push oil prices higher on Thursday. The Commerce Department said that consumers spent more in November than the month before. And the Labor Department said that the number of people applying for unemployment benefits fell by 3,000 last week to 420,000.
A weaker dollar also supported higher oil prices. Since oil is priced in dollars, it becomes more affordable to investors with foreign currency like the euro as the dollar falls.
Benchmark crude rose $1.03 to settle at $91.51 on the New york Mercantile Exchange.
While oil and gasoline prices are climbing, the price of one of the main heating sources in the nation — natural gas — is falling. It's down about 11 percent in the past two weeks. On Thursday natural gas lost 6.9 cents to settle at $4.083 per 1,000 cubic feet on the Nymex.
Much of the nation has shivered through below-average temperatures in December, and on Thursday the Energy Department said the nation's natural gas supplies shrank last week by 184 billion cubic feet. But there is so much natural gas in storage — almost three and a half trillion cubic feet, or more than 8 percent more than the five-year average — that prices have stayed relatively low.
Some weather forecasters think temperatures will rise next month, which should keep a lid on prices for natural gas and electricity. "Slightly decreased heating demand in January is expected along a large swath of the country from Texas through the Mid-Atlantic region and north into New York and New England," said Chris Kostas, senior power and gas analyst with consultants Energy Security Analysis Inc.
Natural gas is used to generate about 20 percent of the nation's electricity.
In other Nymex trading, heating oil rose 1.23 cents to settle at $2.5408 per gallon and gasoline gained 1.81 cents to settle at $2.4426 per gallon.
In London, Brent crude rose 60 cents to settle at $94.25 on the ICE Futures exchange.