WASHINGTON, D.C. — Most California drivers haven't seen gas as cheap as the national average ($2.22) since February. They now pay an average of $2.46, with the price rising daily in many places. San Francisco's average has hit $2.63, and it's climbing. For the Bay Area, that could mean $3 per gallon by the summer, some experts believe. Longer-term predictions are more troubling: according to a report by the Federal Energy Information Administration, prices will stay high at least through 2006. It was also predicted on April 12 that the national average for a gallon of regular gas would peak next month at $2.35 before settling closer to $2.28 for the summer. Even if prices decline from their current heights, they may not fall far. "The fact that we had $25 to $30 oil for a while is really something we should appreciate, because that's over," said Emory University economist Ujjayant Chakravorty, who studies energy prices. If true, gasoline prices could average $2.50 to $3 nationwide, he said in a report published by Weststart/Calstart. The energy administration, part of the U.S. Department of Energy, warned that worldwide demand for oil would continue surging through next year, although growth in China might finally slow. The report echoes an idea gaining credence among energy analysts: higher prices, at least compared with those in the 1990s, may be permanent. Some economists and industry analysts argue that market forces eventually will push crude oil costs down, noting that, adjusted for inflation, oil prices have spiked this high before, only to fall back to roughly $20 per barrel. But others say the growing economies of the developing world have fundamentally changed the oil market. Supplies can't grow fast enough to keep up with rising demand that comes from many countries and regions, not just America and Europe.

Originally posted on Fleet Financials