Up here in Oregon, it's about $2.31 at the cheapest station nearest me, averaging closer to $2.35/gallon statewide.
The main reason for the increase in gas prices, according to the financial media, is the red-hot growing economies of India and China, both running at roughly 10% annual growth. Both are growing so fast that oil demand over the last few years have skyrocketed from those two countries and have put pressure on oil prices while oil demand in the G8 countries has grown only slowly. Increases in US demand are actually running slower than normal, historically.
While many would think that the Iraq war is the main contributor, it actually isn't. Iraqi oil is pumping along as usual with relatively few interruptions lately from the terrorists, who have been concentrating on killing civilians instead. And since Iraq is exempt from OPEC quotas, they are free to pump as much as they want to.
But even China and India cannot account for the latest increases in oil prices. That is primarily due to investor speculation. These are people who are investing solely in the belief that prices are going up and who will never take delivery of a single barrel of oil. Every slight perceived disruption in supply, such as hurricane threats to Louisiana, refinery fires, Nigerian strikes, threats from Hugo Chavez of Venezuela (an OPEC member), or Russian takeovers of Yukos (the largest Russian oil company) contributes to huge influxes of speculators.
The speculation is such that it baffles even economists who have followed the oil market for years. The supply/demand factors only justify oil prices at perhaps $40-45/barrel, not the $60/barrel it is currently priced at in the futures markets. The rest is due to speculation. The Saudis are pumping oil like mad to try to reduce the prices, but are unable to do so as oil sits in storage with few buyers. Note that this production affects spot market prices only. The prices quoted in the press are usually for futures contracts for Texas light sweet crude or UK's North Sea Brent crude, several months down the road. The futures prices are running much higher than current spot prices.
Gasoline prices, while largely tied to oil, also are due to other factors, primarily environmental regulation. Regulations are so onerous in the US that no refinery had been built in the US for thirty years while at the same time, demand has skyrocketed. Refineries pump at full capacity and still cannot meet demand, so any additional requirements are farmed out overseas. Many economists attribute high prices to refinery bottlenecks, rather than actual oil supply. The problem can only get worse as no new refineries are in the pipeline.
US supply of oil has also dropped over the last thirty years. While old oil wells dry up, no additional ones are started. Even a battle over a miniscule 2,000 acre portion of Alaska containing the largest oil discovery in the United States is fought over tooth and nail to prevent us from reducing our dependency on foreign oil. And even conservative state governors have a "not-in-my-backyard" philosophy on oil drilling.
Further environmental regulations require thirteen "boutique" gasolines to be refined for various regions of the country. This has the result that no gasoline refined for a particular region can be legally transported to another region if a shortage develops. It also makes it difficult for refineries to convert to a different blend if a different distribution of gasoline is required, adding to shortages and higher prices. Reducing the boutique blends to one would likely dramatically reduce the price of gas, while making it far easier for refineries to produce gasoline.
Also during the summer months, the federal government requires additives to be put in gasoline to reduce emissions during the peak driving seasons. As it turns out, the additives don't work. While they do reduce emissions for a gallon of gas, the drawbacks are that they introduce water vapor into car engines and weaken the amount of energy produced. So to go the same distance, additional gas has to be burned negating the intended effects of reducing emissions. The result is higher gasoline consumption and higher prices with no net reduction in pollution.
Finally, driving demand has proven to be very inelastic. Higher prices have not significantly reduced demand for gas. Much of our driving is to/from work or to/from stores and such and cannot easily be reduced. Mass transit helps somewhat, but most people aren't willing to give up their cars. So as prices rise, sellers are given no incentives to reduce those prices as demand doesn't decrease.
