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Gas prices continue to climb

State average is up 14 cents; effect seen in driving habits

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By Erin Ailworth and Allison Knothe
Globe Staff | Globe Correspondent / March 8, 2011

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The price of gas in Massachusetts rose 14 cents over the last week, sparking concerns that it will climb even higher than expected as violence in Libya and turmoil in the Middle East continue to spread.

A gallon of regular unleaded is averaging about $3.45, according to the latest price survey released yesterday from the American Automobile Association of Southern New England, the highest in Massachusetts since October 2008, when prices were coming off a historic peak of more than $4. Nationally, the average price for gas is $3.50 a gallon, according to AAA.

The automobile group had been predicting that gas prices in Massachusetts could hit $3.50 this spring, said Mary Maguire, AAA Southern New England spokeswoman. Fuel prices typically rise during the spring months anyway, but with the unrest in Africa and the resulting concerns out of oil-producing nations like Saudi Arabia, she said, $3.75 “would be in the realm of possibility’’ by Memorial Day.

The rising fuel prices come as Americans are again hitting the road: They drove a total of 3 trillion miles last year, the most since 2007 and the third highest on record, according to the Federal Highway Administration.

If fuel prices continue to rise, AAA’s Maguire said she expects to see drivers changing their habits, much as they did when costs jumped in 2008.

“There is a tipping point,’’ Maguire said, “and I think we will see people trying to drive less, trying to eliminate unnecessary road trips, trying to consolidate their trips.’’

Chris G. Christopher Jr., a senior economist with the Lexington forecasting firm IHS Global Insight, agreed, saying the already slow economic recovery could take a hit if prices go up further, because consumer confidence will drop as people spend more at the pump.

“You still have to go to work, bring the kids to soccer games, whatever, so you won’t have money to spend on other items,’’ he said. “It definitely hurts.’’

Some Massachusetts drivers already are cutting back. Mary Hicks of Dorchester said she has almost stopped driving her minivan completely.

“In the past two weeks, I probably have taken my car out three times,’’ she said, whereas she used to drive about five or six days a week.

And now, when she does use her car, she plans her route. “I make sure I maximize the errands I have to do in the same end of town,’’ Hick said.

Crude oil is the main component of gas, and therefore its price drives the price of gasoline. The price per barrel of crude topped $100 last week, and rose more than $1 yesterday to close at just over $105 a barrel on the New York Mercantile Exchange.

The civil unrest in Libya is a major reason why fuel prices are rising, analysts say. Oil and gas production in Libya has fallen from 60 to 90 percent since mid-February, according to estimates by the US Energy Information Administration, a statistical arm of the Department of Energy.

Though the country only accounts for about 2 percent of the global oil and gas supply, the disruption in production will have an impact across the world, as buyers replace that oil with barrels intended for other destinations or use.

With fuel prices rising, federal officials are talking about whether to tap the nation’s Strategic Petroleum Reserve, a stockpile of government-owned crude oil that is kept to hedge against disruptions in the commercial supply. The reserve, which was established after the oil crisis of the 1970s, is usually tapped only in extreme cases, as in 2005 when the White House released oil from the reserve following Hurricane Katrina.

“It’s an option we are considering,’’ White House press secretary Jay Carney told reporters yesterday. “But there are a number of factors that go into it and it is not price-based alone.’’

That’s little comfort for Larry Meister, a taxi driver with the Independent Taxi Operators Association in Boston, who said the current cost of gas cuts into his profits by several dollars and that will only increase as prices rise.

“We just deal with it. Being a regulated industry, we cannot charge more for the rides,’’ he said. “You just end up working more hours.’’

Erin Ailworth can be reached at eailworth@globe.com.