It may be the happiest season of the year, but higher oil prices that have translated into gasoline prices topping $3 a gallon have many motorists frowning.

According to the latest survey by the AAA motor club, the nationwide average for a gallon of regular unleaded fuel surpassed $3 a gallon Thursday, its highest level in more than two years.

Thursday's average rang in at $3.01 a gallon, compared to $2.98 a week ago, according to AAA's Daily Fuel Gauge Report. Prices were highest in states known for high fuel costs, including New York, California, Alaska and Hawaii, where prices ranged from $3.27 a gallon in New York to $3.64 a gallon in Hawaii. Prices were lowest in Colorado, where they averaged $2.76 a gallon.

The average price of fuel has climbed steadily since reaching a low of $1.62 a gallon in December 2008, noted. Still, that's well below the $4.11 a gallon recorded earlier that year in July.

A Christmas First

"We've never had Christmas Day with gasoline at $3 or higher," says Tom Kloza, chief oil analyst with Oil Price Information Service, an energy trade publication based in Wall, N.J.

What's causing the rise in oil prices? Many analysts blame the weak U.S. dollar, although expectations of a more robust economic recovery in the coming year have also helped push oil to over $90 a barrel in trading on commodity markets. In early trading Thursday, oil prices were up fractionally to $90.53 a barrel on the New York Mercantile Exchange.

Crude futures rose above $90 a barrel on Wednesday, after the American Petroleum Institute, a trade group, reported U.S. oil stockpiles fell by 5.8 million barrels in the week ending Dec. 17. The decline was much larger than analysts had expected.

In a report later Wednesday, the Department of Energy confirmed crude supplies had dropped by more than 5 million barrels, which analysts attributed to year-end inventory adjustments rather than higher demand or shortage of imports.

Still, AAA doesn't expect that higher fuel prices will keep Americans from hitting the nation's highways this holiday season. The organization predicts 85.7 million people will travel by car to their holiday destinations, a 3.2% increase above last year, reported.

The rise in gas prices also isn't expected to put a damper on economic growth in the New Year. Economist Zach Pandl of Nomura Securities told the Marketplace Morning Report radio program there are good reasons and bad reasons for oil price increases. The recent rise is good because it's being caused by a gradual increase in demand, he said.

"The kind of increase we're seeing today, although it's uncomfortable, it probably doesn't have a very large impact for the economy as a whole," Pandl said.

A Grinchy Turn of Events

Higher prices for crude also translate into greater costs for home-heating fuel, a dominant source of heat for homes in the Northeast. Futures contracts on heating oil for January delivery rose 1.2 cents, or 0.5%, to $2.53 a gallon on Wednesday, the highest settlement price since Oct. 3, 2008, Bloomberg News reported.

That means even consumers in New England and states such as New York and Pennsylvania who plan to stay put for the holiday season will still see their wallets thinned by the run-up in oil prices. That's a very Grinchy turn of events indeed.

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like scotland plenty of oil but none for us, wish these gooks that run the country think about joe public for a change,, roll on four years and get these muppets out hermet would do a better job than these gits

January 10 2011 at 9:48 AM Report abuse rate up rate down Reply

what kind of a headline is that. gas has NEVER been UNDER three dollars a gallon in Chicago for years

January 04 2011 at 6:41 PM Report abuse +1 rate up rate down Reply

not only r we getten screwed by our eneimes but by our on goverment by them not controlling OPEC when this country is broke i wonder who will own us,,,,

December 31 2010 at 5:20 PM Report abuse +1 rate up rate down Reply

wtf with all these hybird cars an trucks hitting the streets why is gas so high we should allready be cutting our fuel demand on the fuel supplies we should be cutting back on demand for fuel so wtf is the price becomeing so high i feel ther should be a stockpile of fuel by now they should be giving it away (almost) just to get rid of of it,, with all the hybirds on the road why cant this country supply its on fuel instead of makeing our enmeny richer at 90+ $ abarrel something to think about

December 31 2010 at 5:15 PM Report abuse +1 rate up rate down Reply

I see Danny has pulled a "Yenti" for the last 3 days.

December 27 2010 at 8:32 AM Report abuse +1 rate up rate down Reply

The high price of oil has renewed exploration activity, but energy engineering and geoscience professionals in the United States are rapidly moving toward retirement age. Political and technological changes may rapidly accelerate the number of trained professionals needed.

December 26 2010 at 9:09 PM Report abuse +1 rate up rate down Reply

The largest foreign suppliers of oil to the United States are our enemies. It has been a long time since the United States claimed Canada and Mexico our enemies.

December 26 2010 at 8:58 PM Report abuse +1 rate up rate down Reply

5:33 PM Dec 26, 2010
•(0) vote this comment up

See full article from DailyFinance: lacits I had to report this comment to Aol It sound like you just showed you low IQ.

December 26 2010 at 6:00 PM Report abuse +6 rate up rate down Reply

Can we drill our way to lower gas prices? Given that we're spending billions of stimulus dollars to rebuild our highways, it makes sense to think about what we'll be driving on them. For years to come, most of what we drive will be powered, at least in part, by diesel fuel or gasoline. To fuel that driving, we need access to oil. The less use we make of our own reserves, the more we will have to import, which leads to a number of harmful consequences. That means we need to drill here and drill now.

December 26 2010 at 1:41 PM Report abuse +2 rate up rate down Reply

Conservation is a good thing, but conservation is not an energy source. The only way to lower the price of oil (hence gasoline) is to increase production.
Lobbyists on the political left oppose oil exploration in the Gulf of Mexico and in parts of Alaska, even though ANWR is floating on 16 billion barrels of recoverable oil. How much risk of pollution is worth the price of oil. What price are we , as a people willing to pay for a secure energy supply. There is no free lunch.

December 26 2010 at 1:01 PM Report abuse +2 rate up rate down Reply