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Gas prices drop in time for Memorial Day travel; hotels, airfares rise

The price gas rose 17 cents per gallor 5.1 percent July as oil rose drivers burned more fuel summer road

The price of gas rose 17 cents per gallon, or 5.1 percent in July, as oil rose and drivers burned more fuel on summer road trips. It was the first monthly increase since March.

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Updated: July 3, 2012 9:10AM

As Memorial Day weekend approaches, gasoline prices will continue to put less of a hurt on your wallet thanks to the continuing plunge in oil prices, which dropped below $90 a barrel for the first time in seven months Wednesday.

But travelers will pay more for hotels and airfares this holiday weekend.

The average price of unleaded regular gasoline in the Chicago metropolitan area Wednesday was $4.11 a gallon, 12 cents below the $4.23 a gallon it averaged a month earlier according to AAA, Wright Express and the Oil Price Information Service. It was also 12 cents below the average last Memorial Day weekend.

In the city of Chicago, the average Wednesday was $4.28 a gallon, 14 cents below the $4.42 a gallon it averaged a month earlier and 21 cents below the $4.49 a gallon it averaged last Memorial Day weekend.

Average gas prices began rising earlier in the year and peaked in March at $4.51 a gallon in the Chicago area and at $4.68 in the city as oil prices spiked due to increased tensions over Iran’s nuclear program.

Going forward, “the trend for gasoline prices continues to be down,” said oil industry analyst Phil Flynn of Chicago-based PFGBEST.

Benchmark U.S. crude closed at $89.90 a barrel Wednesday, down 2.1 percent, after the government said U.S. oil supplies grew last week by 900,000 barrels and hit the highest level since 1990. Analysts had expected supplies to grow by 750,000 barrels. The price has fallen from a 2012 peak of $110.55 on March 2 and hit the lowest level since October, Flynn said.

“The Iran premium that drove up prices dramatically early in the year is going away,” Flynn said.

Crude prices have plunged as fears have eased that the U.S. or Israel would launch a preemptive attack on Iran’s nuclear facilities — action that would likely disrupt global oil supplies and push prices higher.

Prices also have dropped on concerns European economies will keep slowing down, reducing world oil demand. The oil market is worried that Greece could leave the eurozone, Flynn said, adding, “the concern is that if Greece goes down, some of the other eurozone countries that have problems like Italy, Spain, Ireland … they could be next…That is hurting confidence.”

While gas is cheaper, AAA’s forecast shows air fares running 7 percent higher than last year, with an average lowest round-trip fare of $189 for the top 40 U.S. air routes.

Hotel rates for AAA Three Diamond lodgings are forecast to be 8 percent higher, with travelers spending an average of $160 per night, up from $148.

Contributing: AP

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