Skies Clear, Sky Blue; Gas Prices Move

Not to sound prescient or anything, but as predicted here, gas prices are now responding to increases in the price of oil. And the media is going crazy:

It's only March, but gas prices already are topping $2.20 a gallon in the East Bay and Peninsula, and some analysts say prices could reach a record $3 a gallon later this year.

"Gas prices this summer in California could hit $3 a gallon," said Phil Flynn, energy analyst with Alaron Trading Corp. in Chicago. "If everything goes smoothly, we won't hit $3 a gallon in California. If anything goes wrong, we could hit $3."

It's a sticky situation. Crude oil prices are surging. Global supply is tight, barely meeting the demand fueled by China, India and the United States. Supply is particularly tight in California, where refiners have been pumping out gas at near-capacity levels and now are producing the more costly but cleaner-burning summer blend fuel.

Add in taxes of more than 50 cents a gallon, and you've got a formula for higher prices. Average local prices for regular unleaded gasoline have risen more than 20 cents a gallon in the past month to $2.26 a gallon in the San Francisco area and $2.21 a gallon in the Oakland area, AAA said Monday.

Try $2.45 for one of the "cheap stations" in Los Angeles this morning!