Gas price predictions fuel thoughts of Transportation Spending

Gas experts in California see prices continuing to rise--but only up to a point. The market will not bear widespread prices over $3 a gallon:

Like most businesses and consumers, Mendez is pondering the possibility that gasoline might hit $3 per gallon this year in Orange County. New signs would include the number "3" with a decimal point.

"We're as high as we've ever been,'' she said. Still, she's not sure if Orange County will see $3 for a gallon of regular soon. "It would have to go up a lot."

Industry experts agree, saying $3 is not in the cards for California. Prices should rise between now and mid-April, before leveling off, but "$3 is hyperbole," said Tom Kloza, chief oil analyst at the Oil Price Information Service, a trade publication that tracks prices.

Monday, the state's average for a gallon of regular gasoline reached $2.376, up 6.4 cents from last week.

The upside of rising gasoline prices is an increase in revenues on the sales tax charged on gasoline. The increase, as well as other rising State revenues, could mean that funds previously taken away from Proposition 42 transportation projects could begin to flow again:

State finance director Tom Campbell said Monday that gas-tax money that's been diverted to balance the state budget could soon be used for its voter-intended purpose of repairing and building roads.

Prop. 42, approved by California voters in 2002, dedicated gasoline sales-tax revenue to road and transportation projects.

The measure contained a provision that let lawmakers borrow the money in lean years to close state budget gaps.

That's what the state has done, directing $2.1 billion of Prop. 42 money into the state general fund since the 2003-04 fiscal year.