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Gas prices on the rise

A gallon of regular unleaded rises by nearly a cent to $1.626. Americans used less gas during week of Christmas.

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By Lara Moscrip, CNNMoney.com contributing writer

What was the biggest business news story of 2008?
  • Auto industry meltdown
  • Bailout of Wall Street
  • Foreclosure storm
  • Oil price's wild ride
  • Stock market meltdown
  • It's official: U.S. in recession

NEW YORK (CNNMoney.com) -- Gas prices increased for the third straight day Friday, to an average of $1.626 for a gallon of regular unleaded gas, according to motorist group AAA. That's nearly a one-cent jump from the previous day's average of $1.618.

The price of gas is down by nearly 20 cents from the prior month's average of $1.803, and prices are off by nearly 47%, or $3.052 from this time a year ago.

Prices have plummeted along with the price of crude oil, the main ingredient in gas. Oil has shed more than $100 a barrel since July, and gas prices have followed suit, sinking by more than 60%, or nearly $2.50 since reaching a July high of $4.114 a gallon.

Motorists are driving fewer miles and buying less gas in reaction to the weakening economy. Americans drove 100 billion fewer miles during the 12-month period between November 2007 and October 2008 compared with the prior year, according to the U.S. Department of Transportation.

And gas consumption was down 3.2% in 2008 when compared to a similar length of time in 2007, according to the MasterCard Spending Pulse report, which tracks national retail sales.

For the week ending Dec. 26, U.S. gas consumption fell by 2.9%, according to data from the MasterCard Spending Pulse report.

Robert Sinclair, AAA spokesman for the New York area, projected a "strong drop" in vehicle sales "with greater emphasis on fuel economy with diesels having more prominence." He said Americans are less likely to buy SUVs when gas prices are cheap, out of the expectation that prices could rise again.

"America is a very different place now," said Sinclair. "People are faint out of fear of what the future holds."

State prices: Prices remained above $2 a gallon in only two states on Friday: Alaska ($2.521) and Hawaii ($2.304). Gas was cheapest in Missouri at $1.395 a gallon on average, and sold for less than $1.50 on average in 11 states.

Out of major U.S. cities, Anchorage, Alaska, has the highest average gas prices, at $2.342 a gallon, according to GasBuddy.com, a service that lets motorists post local fuel prices online. St. Louis, Mo., has the lowest average, at $1.321.

Diesel: The price of diesel fuel, which is used in most trucks and commercial vehicles, fell to an average of $2.411 on Friday.

Ethanol: The price of E85, an 85% ethanol blend made primarily from corn, increased by a cent to an average of $1.470 a gallon in Friday's survey, according to AAA. E85 can be used in place of regular gas in specially configured "flex-fuel" vehicles, but it is not readily available in some states.

The AAA figures are state-wide averages based on credit card swipes at up to 100,000 service stations across the nation. GasBuddy prices are averages of local regular unleaded gasoline prices that about 700,000 volunteer gas prices spotters have posted online. Individual drivers may see lower fuel prices in different areas of each state.

CNNMoney.com staff writer Aaron Smith contributed to this report.  To top of page

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