Weak dollar equals higher gas prices

By Larry Hartstein

The Atlanta Journal-Constitution

Gas prices are soaring at the time of year when they normally drop.

The average price of regular in metro Atlanta hit $2.57, up 17 cents in the last week and 36 cents in the last month. The average price of premium hit $2.89.

Crude oil closed Friday at nearly the high for the year: $80.50 a barrel.

It has nothing to do with supply and demand and "everything to do with the weakness of the dollar," AAA South spokesman Gregg Laskoski said.

"The dollar is now at its lowest point against the Euro in the last 14 months. That creates a red flag for investors and draws speculative investment in commodities. It's a hedge against the weak dollar," Laskoski added. "That's what's really driven everything the last three or four weeks."

Gas prices usually decline in the fourth quarter. After Oct. 1, refineries switch to a winter blend that requires fewer additives and is cheaper to produce. Those savings are usually passed on to motorists.

In fact, gas prices have risen in the fourth quarter only once in the past 30 years, Laskoski said. That happened in 2007 when the Federal Reserve, trying to fend off a recession, cut interest rates, weakening the dollar.

So will gas prices keep rising?

"A number of analysts think it's going to flatten out pretty shortly, this week or next week, but that remains to be seen," Laskoski said. "If the dollar continues to lose value, we could see fuel prices go higher."