As the economy continuously improves you should expect to keep hearing this: gas prices are rising! For the fifth straight week in a row, the average price of regular unleaded gasoline has increased – this week by three cents. Gas prices now average $2.82 across the nation.

The five week bullish run has amounted to a significant $0.21 increase in the cost of gasoline. To put that in a different perspective, gas prices have increased by 86 cent over the past year and of that increase 25% of it occurred over the past five weeks.

On a per region basis, gas prices are the cheapest in the Gulf Coast, at $2.69 a gallon. Considering that’s where the majority of America’s supply comes from it’s not surprising. The Rocky Mountain area is next at $2.77 – remember that Wyoming and North Dakota are big oil producer as well. East Cost prices rose by only a penny to $2.79 per gallon. The Midwestern region incurred the largest increase in the United States with a seven cent spike, to $2.81 a gallon. Despite the spike in the Midwest, West Coast prices remain the highest in the country at $3.03 per gallon.

Within the contiguous United States, New Jersey has the cheapest gas prices at $2.62 a gallon and California has the highest, at $3.09 a gallon, according to Gasbuddy.com.

The average price of diesel fuel moved up two cents to $2.95 per gallon, $0.86 above the price a year ago.

Continue to expect gas prices to increase due to the summer driving season and changes in summer formulated gasoline. According to the U.S. Energy Information Administration (EIA), gas prices will average $2.84 in 2010, but expect prices to exceed $3 a gallon nationally during the spring and summer driving months. $4 a gallon prices in California by the middle of this summer are now possible.

Nevertheless, the EIA points out that expected U.S. consumption of oil remains at a lower point than our peak levels in 2005. By 2011, total consumption will be less than 1999 levels due to a more fuel efficient national fleet of vehicles.

There are some other encouraging signs from the EIA’s latest forecast. The EIA sees long-term potential for increased oil supplies from Brazil, Russia, and Kazakhstan. Due to new oil findings, an increase in CAFE standards for 2016 and the dramatic decreases in gas prices that occurred in late 2008, the EIA only sees a price per gallon of $3.68 by 2030 (in 2008 dollars).

So I guess we can look forward to some stability in the future, but then again, these models weren’t calibrated for sudden changes in political atmosphere. For all we know a modern oil embargo could flare up at any moment.

Source: Unless otherwise specified, all information is courtesy of the U.S. Energy Information Administration (EIA)

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