Gas expert: $3 a gallon by Thursday

GasBuddy.com petroleum analyst Patrick DeHaan tells 24 Hour News 8 the price for a gallon of unleaded gasoline in Michigan could reach $3 as early as Thursday morning.

Gas prices across the state have risen to $2.772, up nearly 20 cents in one week as refiners race to increase output of summer blended gasoline, which typically costs more to produce.

Motorists can afford to pay higher gasoline taxes and vehicle registration fees to improve roads, said Kirk Steudle, Michigan's top transportation official.

He warned state lawmakers Tuesday that more than 125 road and bridge projects will be delayed if Michigan does not get more funding. Steudle urged lawmakers to support a proposal to convert the gas tax to a percentage tax on the wholesale price of gas, which would rise at capped amounts as prices increase.

Gov. Jennifer Granholm's administration supports higher gas taxes and vehicle registration fees to improved the transportation infrastructure, but some lawmakers say it will be politically difficult to ask drivers to pay more.

While stockpiles of oil are off their near-record highs, they remain much above average for this time of year, DeHaan said. On the other hand, gasoline stockpiles are much below average, driving prices higher as traders speculate a turnaround in the economy will cause demand to rise.

Particularly hard hit is Michigan, Illinois and Wisconsin, with prices skyrocketing 60-cents higher in just one month. This comes after BP reported a gasoline producing unit in Indiana would not come back online from spring maintenance until mid-June.

Also helping prices higher is news of Citgo on Monday shutting down a gasoline producing unit at its Lemont, Ill. facility.

Gasoline stockpiles in the Midwest are at an all-time record low as a result of low production.

The possible Thursday morning hike is a result of record-low supply and increasing demand as the U.S. driving season begins, DeHaan said.

Prices in the Midwest slowly will begin to fall in the coming weeks closer to the national average, which stands Tuesday at $2.521, only after stockpiles of fuel increase.

As of Tuesday afternoon, California, Michigan, Illinois, Wisconsin and Washington round out the five most expensive states, respectively, for gas prices in the continental United States.

Consumers in Utah, South Carolina, Arizona, New Jersey and Tennessee are enjoying the lowest gas prices, respectively. The five most expensive states average $2.73 a gallon, while the bottom five come in at $2.35 a gallon.