Gasoline prices are on the rise again, and many experts are predicting that pump prices may get back near their record highs above $3 a gallon by the end of the year, potentially shrinking consumers' wallets drastically during the holiday shopping season.
The average price of a gallon of regular unleaded gas in the Charleston area was $2.733 on Wednesday, according to travel club AAA Carolinas. That's up 63.7 cents, or 30 percent, from the same day last year, and up 9.9 cents, or 3.8 percent, from just two weeks earlier.
Through October, 2007 is on course to post the region's highest annual average price ever; so far, it's up 5.3 percent from last year.
Nationally, the average price is $2.899, according to AAA, up 68.9 cents, or 31.2 percent, from a year ago.
With crude oil trading at record highs — the nearby contract closed at an all-time high of $94.53 per barrel Wednesday, up $4.15 for the day and up 61 percent from a year ago — it's likely that gasoline prices will continue to head higher.
"The pain at the pump, I think, is going to continue," said Michael Fields, executive director of the South Carolina Petroleum Marketers Association.
The recent runup in oil prices surprised some veteran forecasters, who expected crude to dip this fall, as it usually does because of a seasonal decline in demand after the summer driving season and ahead of colder winter weather.
What's fueling the record highs in crude prices, besides a severely weakened U.S. dollar, instability in oil-producing countries and the overall rise in global demand, is market speculation, according to Tom Crosby, vice president of communications for travel club AAA Carolinas.
"If you look at the price of a barrel of oil at $90, probably $10 of that barrel is speculation," he said.
And so far, the full impact of the runup in crude prices has yet to be passed on to consumers.
As for how much higher gas may climb, many industry observers predict prices above $3 per gallon nationally. One reason: If the price of gasoline were up from a year ago by the same percentage as oil, it would be well above $3 a gallon now.
Crosby agreed with that outlook. By the end of the year, he said, "We can see $3 pretty clearly."
If that forecast bears out, it means consumers will have less money to spend on holiday shopping, especially if their year-end plans include a family getaway via automobile.
Britt Beemer, chairman of America's Research Group, a Charleston-based consumer behavior marketing company, said his surveys indicate that families already are paying $20 a week more for groceries than they did a year ago. Part of the reason for that increase is the higher cost of fuel to process and transport food.
Largely as a result of those factors, Beemer said, he's predicting that retail sales this holiday season will be less than 2 percent above last year's level, which he said would be "the smallest increase in two decades."
Some merchants are feeling the pinch. Fields of the Petroleum Marketers Association noted that independent gas station operators "are looking at the lowest profit margins in at least two decades."
That situation has been exacerbated by customers' increasing use of credit cards as gas prices rise, raising the fees merchants must pay to credit card companies, as well as an increase in drive-offs.
"The picture is blurry and bleak for consumers as well as small-business marketers," he said.