Gas Prices Expected to Hit $3 by Christmas

Man pumps gas into his truckGas prices last month hit their highest prices in two years, $2.91 per gallon on average for regular, according to the the Lundberg Survey. And it will probably cost $3.00 by the time families set off to see the grandparents for Christmas.

Mid-grade gas was $3.05 and premium was at $3.16, according to the survey.The lowest price the survey found was in Denver -- $2.61 a gallon for regular. Prices on Long Island, just outside of New York City, were the highest at $3.21.

Gas prices in this survey were nearly 28 cents higher than in December a year ago. The Lundberg Survey sampled prices at about 2,500 gas stations.

Even as gas prices climb, though, consumers seem to be taking the hikes in stride. Sales of sport utilities, which offer poorer fuel economy than most cars, continue to rise while sales of hybrid vehicles have been disappointing. Geroge Pipas, head of sales analysis for Ford says some of low demand for fuel-efficient cars can be attributed to high unemployment and under-employment among 18-30 year olds, whose first car is traditionally a small, four-cylinder vehicle.

The psychological "tipping point" for consumers to radically change their buying preferences to reflect concern over prolonged higher gas prices is $3.75, according to Pipas. But, he says, $4.00 is where it will become very noticeable, with people favoring cars over SUVs and pickups if they are buying at all.

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