Gas prices: Above $2, and rising

Prices at the pump are the highest they've been since late November, recalling the rollercoaster market of 2008.

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By Julianne Pepitone, CNNMoney.com contributing writer

At what point will the Dow be at the end of June?
  • Above 8,000
  • About the level it is now
  • Below 7,000

NEW YORK (CNNMoney.com) -- Gas prices have risen 5% in just nine days, above $2, and they will continue inching higher despite the battered economy.

Motorist group AAA reported gas prices rose 2.3 cents to $2.009 on Thursday, rising above the $2 mark for the first time since Nov. 20.

Thursday's report caps a nine-day streak of increases in which gas prices have risen 5.2%.

The steady increase in prices at the pump recalls the previous year's wild ride when gasoline hit a record-high of $4.114. While prices are expected to continue climbing in 2009, the superspike seen in July seems unlikely.

It's a marathon, not a sprint

Prices traditionally increase in the spring and summer - but this year the climb "will be a jog, not a sprint," said Tom Kloza, publisher at the Oil Price Information Service.

"The market is moving up because of the season, not because of fundamentals," he said. "It's a trend, but this is not going to be a year of apocalyptic pricing."

This year will see a slow increase in prices, unlike the fluctuations of the last three years, he said.

Gas prices started 2009 around $1.61 a gallon, which Kloza expects will be the low for the year. Prices will probably peak at $2.25 for the first six months of of the year, he said.

Then hurricane season begins, and storms in oil-production areas can affect prices in unpredictable ways, Kloza said.

Gas prices are susceptible to world events, which make forecast difficult, said Robert Sinclair, spokesman for AAA New York.

"Any crisis, real or imagined, across the globe can make prices go crazy," Sinclair said. "Whether it's a major world event, government actions, or the weather, it's difficult to tell what will come up this year."

Regardless, gas prices will stay relatively low until the U.S. economy begins to stabilize.

Kloza pointed to still-low diesel prices as an indication of the commercial sector's continued suffering. A prolonged jump in the unemployment rate could also lower gas prices, Kloza said.

Though gas prices are off their recent lows, motorists will still save about $100 on gas in July 2009 over July 2008, he said.

Oil

Oil prices settled up $1.58, or almost 3%, to $53.44 at the close of trading Thursday. That's the highest since Nov. 28.

The Energy Information Administration released a mixed inventory report Wednesday, showing soaring oil supplies but lower-than-expected gasoline stockpiles.

Oil prices remained lower but recovered from earlier losses on Wednesday as news of the Treasury Department's bad-bank plan, which pleased investors, outweighed the supply report.  To top of page

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