Prices at the pump hit 26-month high

Associated Press

Americans are getting a sour holiday surprise at the gas pump, where prices are the highest they’ve been in more than two years. They may even hit a national average of $3 a gallon by January.

Although supplies remain plentiful and gasoline demand has diminished since September, retail gas prices are rising because oil prices are at the highest levels since October 2008. The two-week advance continued Monday as benchmark oil for January delivery rose 19 cents to settle at $88.96 a barrel on the New York Mercantile Exchange. A stronger dollar kept prices in check for most of the session. Since oil and other commodities are priced in dollars, a stronger dollar makes them more expensive for buyers who use other currencies.

The national average for a gallon of regular gasoline was $2.958 Monday, according to the Energy Department’s Energy Information Administration. That’s about 10 cents higher than a week ago and 32 cents more than a year ago.

EIA said drivers in California pay the most, at an average $3.216 a gallon.