The continued surge in oil prices is forcing sharp increases in gasoline and airfares as the rising cost of fuel could cascade throughout the U.S. economy for months to come.
The average price for a gallon of regular gasoline was $3.32 in the Fort Worth-Arlington area as of Thursday, according to auto club AAA, Oil Price Information Service and Wright Express. That's a 3-cent increase from a day earlier.
The average for regular locally has now jumped 22 cents from a week ago and 40 cents from a month ago. The $3.32 average is 74 cents higher than the norm of $2.58 a year ago.
And a growing number of Tarrant County gasoline retailers have changed their pump prices to $3.39 for regular.
The average price for midgrade gasoline in the Fort Worth-Arlington area is up to $3.47. Premium is averaging $3.60, and diesel is at $3.66.
Statewide, the average Texas price for regular is $3.30, a 22-cent increase in a week. That represents the biggest one-week rise since Aug. 31 through Sept. 5, 2005, when prices in Texas skyrocketed 40 cents in a week as a result of Hurricane Katrina, which devastated New Orleans and other areas of the Gulf Coast.
The U.S. average price for regular was up another 4 cents Thursday, to $3.43.
The surge in crude oil prices has been cited as the primary driver behind the escalating pump prices.
Oil traders say they've mostly priced in the loss of production resulting from the political uprising in Libya. But the so-called "fear premium" could rise further if reform movements escalate in neighboring countries.
The price of oil has risen 21 percent since Feb. 15, when Libyan protesters began clashing with the government. Libya controls the largest oil reserves in Africa. The U.S. imports only a tiny amount of oil from Libya, but it's still affected by the spike in oil.
Analyst and trader Stephen Schork said gasoline could rise another 32 cents per gallon this spring and peak as high as $3.80 by summer.
Even if oil prices drop soon, shipping costs could rise for months. Fuel surcharges applied by freight carriers like truckers, railroads and package delivery companies like FedEx and UPS lag behind the actual price of fuel by as much as 60 days. So they have yet to price in the recent spike in fuel.
Flying is already more expensive. Jet fuel prices have risen about 13 percent in two weeks and are now up 46 percent from a year ago.
In turn, U.S. airlines have raised fares six times this year, the latest a $10 round-trip increase Thursday. Last month airlines added fuel surcharges to domestic tickets, something they hadn't done since 2008. Those surcharges, now between $3 and $5, are expected to increase swiftly in tandem with fuel prices.
In the latest price increase, Fort Worth-based American Airlines raised fares on flights within the 48 contiguous states by $10 per round trip, spokesman Tim Smith confirmed Thursday.
Delta Air Lines boosted fares even higher -- up $10, $14 or even $20 per round trip depending on flight length, according to spokesman Trebor Banstetter. The Delta increase was originally aimed at business travelers who buy last-minute tickets but was expanded to all fares after American's price hike.
United, Continental and US Airways matched American's increase but not the larger Delta hike, said Rick Seaney, CEO of FareCompare.com. He said none of the low-cost airlines -- Southwest, JetBlue and AirTran -- had raised prices.
All the jockeying has left the fate of this price increase up in the air. Airlines sometimes raise fares but then back off if key competitors don't raise their prices. Last week, fares went up $20 per round trip, but the increase was scaled back to $10 after some carriers balked at the bigger hike.
Some analysts think if prices go any higher, leisure travelers will just stay home, although Seaney doesn't share that view yet.
"It is pretty clear that demand hasn't softened enough to prevent airlines from testing new highs for base domestic ticket prices," he said.
And if airlines are unable to raise fares, some are already cutting back on their plans to add more international and domestic flights this year.
In the past few weeks, American and Delta announced that they have trimmed back plans to fly more passengers this year. That means travelers will see fewer available flights and more crowded planes this spring and summer.
The impact goes beyond the gas pump and airline tickets.
Food merchants, shipping companies and other businesses will likely try to pass along higher costs.
Retail consultant John Haber said online florists, pizza delivery companies, trash collectors, cruise lines and taxi drivers raised rates in 2008, when crude oil skyrocketed to nearly $150 a gallon, pushing gasoline and diesel above $4 per gallon.
The rise in oil this year "is going to trigger the exact same type of behavior," said Haber, a partner at NPI.
Diesel fuel, used by truckers, railroads and cruise ships, is up to a national average of $3.78 per gallon.
Already, the impact can be seen at the grocery store, where consumers buy lettuce, onions, strawberries, avocados, eggplant and other produce shipped from Mexico and California, Haber said.
Ken Perkins, president of RetailMetrics, said that if gas hits $4, shoppers will change their habits. They'll cut back on discretionary purchases and make fewer trips to the mall.
Oil prices retreated Thursday from two-year highs set a day before. Benchmark West Texas Intermediate for April delivery fell 32 cents to settle at $101.91 per barrel on the Nymex.
In other Nymex trading for April contracts, heating oil fell less than a penny to settle at $3.049 per gallon, and gasoline futures lost less than a penny to settle at $3.026 per gallon. Natural gas gave up 4 cents to settle at $3.778 per 1,000 cubic feet.
In London, Brent crude fell $1.56 to settle at $114.79 per barrel.
Staff writers Jack Z. Smith and Andrea Ahles contributed to this report, which includes material from The Associated Press.