When will gas prices finally level off? Today, Alaska became the first state in the U.S. where the average price of gasoline reached $4.00 per gallon. Last year at this time, a gallon of gas in Alaska cost an average of $2.94, meaning the price has risen by over a dollar in Alaska during that span. Nationwide, the average price per gallon is $3.75, up from $3.35 a year ago. Analysts are predicting the price in Alaska and across the country will continue to rise at least through Memorial Day weekend, traditionally considered one of the biggest driving weekends of the year and when gas prices often reach their peak due to heavy demand. “Memorial Day is a little to the gasoline industry what Christmas is to retailers,” one analyst remarked.
Another increase in gas prices of a few more cents at the pump will likely not have any effect on people’s willingness to pay. While everybody likes to complain about the price of gas, everybody also will continue to buy it. Americans (and people in other industrialized countries) are completely dependent on oil and need it to function on a daily basis. Given this fact, it is actually surprising that the price of gasoline is not much higher than it already is. The world’s major oil exporters could probably double the price without causing any significant decrease in demand. Unless there is a real breakthrough in “alternative energy” research, people will keep filling up their tanks no matter how much it costs, because they will have no other choice.
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