Thanksgiving pump prices are certain to be the highest in three years, although a recent drop in oil should lead mean lower prices for drivers once the weekend road trips are done with.
Gasoline prices reached an average of $2.89 a gallon earlier this week, just 3 cents the 2010 high of $2.92 reached in May. Rising oil prices, a seasonal drop in refinery output and a weaker dollar had all contributed to a 5-cent increase in retail gas prices in the past month.
But oil prices have retreated about 7 percent over the 8 days, a decline that is slowly showing up at the pump. And gasoline demand will tail off after the long holiday weekend, putting additional downward pressure on prices.
"Probably as soon as the turkey's done, you'll start to see prices head back down," PFGBest analyst Phil Flynn said.
The national average for a gallon of unleaded regular gasoline was $2.883 Friday, according to AAA, Wright Express and Oil Price Information Service. That's still about a quarter more than a year ago. Any price above $2.64 per gallon will be the highest average price on the day before Thanksgiving since gas sold for $3.09 on Nov. 21, 2007.
Tom Kloza, chief oil analyst at Oil Price Information Service, predicted the national average will drop toward $2.75 a gallon during the winter.
Whether that happens depends partly on the price of oil.
Crude oil prices rose about 14 percent from Labor Day through Nov. 11 as the Federal Reserve's plans to stimulate the U.S. economy weakened the U.S. dollar. That made oil and commodities like gold more of a bargain for buyers who use other currencies. Gasoline prices tagged along, rising about 7.6 percent.
Oil's direction reversed sharply in the past week as investors became concerned that China's effort to slow economic growth. Strong demand for energy in China has underpinned oil prices while the economies of the U.S. and Europe struggle to mount sustained recoveries.
Motorists who live along the West Coast, in Illinois and Maine are among those paying the highest prices, with the average ranging between $3.532 a gallon and $2.995 a gallon. The lowest prices were in the Midwest, Texas and Colorado, where motorists paid between $2.740 a gallon and $2.689 a gallon.
On Friday, benchmark oil for December delivery fell 34 cents to $81.51 on the New York Mercantile Exchange. Since the contract expires Friday, many traders have shifted to the January contract, which dropped 44 cents to $81.98 a barrel.
In other early Nymex trading in December contracts, heating oil fell 2.07 cents to $2.2744 a gallon, gasoline lost 3.23 cents to $2.1960 a gallon and natural gas added 15.7 cents, or 4 percent, to $4.164 per 1,000 cubic feet.
In London, Brent crude gave up 71 cents to $84.34 a barrel on the ICE Futures exchange.