Gas prices climbing to $3/gallon - KWWL - Eastern Iowa Breaking News, Weather, Closings

Gas prices climbing to $3/gallon


WATERLOO (KWWL)-- If you've filled up with gas recently, you may have had sticker shock.  For the first time in more than two years, the price of gasoline is teetering around $3/gallon.

Experts say despite what you may think, the economy is showing signs of improvement, part of which stems from strong holiday sales.  People are starting to spend money and travel more, pushing up the demand for gas.  But now that gas prices are 47 cents higher this holiday season than last year, people may be forced to cut back or look at alternative options when fueling up.

"I think it's really bad that we can make tax cuts for the rich, but we can't keep gas prices down for the poor," one gas customer said.

And if fuel keeps climbing above $3 a gallon, some people say they might have to cut back on how much gas they use.

"Well when you're retired and on a limited income, it makes it a little tougher to travel and everything," another gas customer said.

Typically, gas prices climb when the economy improves.  And that's exactly what's happening now.

"Inventory supplies are low because the economy had been in the doldrums for so long.  So oil companies weren't making gasoline, consequently, because it wasn't being sold.  It's the old supply and demand theory if you will.  Demand's now starting to be up a little bit," said Jim Lind, a gas station owner.

While the nationwide average for a gallon of gas is now around $3.05, there is a cheaper alternative.  E-85 ethanol blended gasoline can currently be found for an average of 40 cents less per gallon, partly because federal mandates make taxes on it lower.  

"Within that mandate of lower taxes, they're also mandating that the ethanol is used more, taking away the choice of the consumers.  So consequently, oil companies are charging more for gas without ethanol," Lind said.

And that price disparity is likely to get worse as gas prices go up.  Lind is in the process of adding an alternative fuels aisle to his Waterloo service station, and he expects that the climbing cost for gasoline will only help fuel sales of products like ethanol and bio-diesel.

Experts say it's hard to predict if and when the price of gas might go down.  But many analysts are predicting pump prices to continue climbing higher as we head into the new year.

"Unfortunately, a lot of the predictions we're seeing indicate that these higher prices may be here well into 2011," said Catherine Fought with the Iowa Office of Energy Independence.

Of course the price of gas translates back to the price of crude oil.  Crude is currently trading around $91 a barrel, which is approaching a 26-month high.

KWWL Reporter:  Kera Mashek

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