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U.S. gas prices jump to $3 a gallon

Gas prices hit new level
Gas prices hit new level 01:50

The average price of regular-grade gasoline in the U.S. jumped 10 cents a gallon over the past two weeks to $3.

Industry analyst Trilby Lundberg of the Lundberg Survey said Sunday that the price has spiked 41 cents over the past three months.

Lundberg says the increase is largely driven by higher crude oil costs and the phasing-in of summer-grade gasoline, which is used to prevent smog.

The highest average price in the contiguous 48 states was $3.79 in the San Francisco Bay Area. The lowest was $2.54 in Baton Rouge, Louisiana.

The average price for diesel fuel rose 9 cents, to $3.23.

Crude oil prices have been on the rise, pushing up gasoline prices along the way. This summer is expected to be the most expensive driving season since 2014, according to Oil Price Information Service.

But higher oil prices are certainly an inconvenience for drivers, especially those with lower incomes. Paying more at the pump could eat into household budgets and blunt the impact of the tax cuts signed into law late last year, wrote Gregory Daco, head of U.S. economics, and Oren Klachkin, lead economist, at Oxford Economics, in a research note published earlier this month. 

"If higher prices are sustained, it would sap some momentum from the U.S. economy," they noted. "Higher energy prices typically translate into higher input and production costs for businesses, which in turn, constrain business activity and lift inflation."

They added, "Simultaneously, higher prices at the pump and elevated inflation constrain households' disposable income and outlays. Importantly, a prolonged rise in oil prices could also potentially reverse part of the benefits from the fiscal stimulus."

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