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Jump in Gas Prices Is Biggest in Two Years; Dow Has Biggest Drop of the Year

Hemera/Thinkstock(WASHINGTON) -- The weekly average price of a gallon of regular gas is $3.54, up 18 cents from a week earlier.  That’s the biggest weekly price increase in two years, according to the Department of Energy.

This price is also up six cents from a year ago. The last time such a big weekly gain was reported was in reaction to the Arab Spring in February 2011.

A strong stock market and signs of a healing global economy often lead to higher oil and gas prices. This time there seems to be a cocktail of factors feeding the high prices:

  •  A jump in crude oil prices, as economic sentiment improves.  U.S. stock markets are reaching for record highs and China’s economy seems to be doing better.
  • Refineries are taking this time to do seasonal maintenance and are switching to summer blend gasoline — so capacity is temporarily restricted.
  • Tensions in the Middle East are in the news again.

Despite the recent escalation AAA does not expect gas prices to reach last year's highs, barring any escalation of Middle East tensions and other unforeseen disruptions.

In the first trading day after hitting the 14,000 milestone, the Dow Jones Industrial Average had its biggest drop of the year, closing at 13,880.08, down 129.71, or 0.9 percent, in Monday’s trading.

The slide Monday is not necessarily bad news, as a healthy market usually takes a breather.

Copyright 2013 ABC News Radio

ABC News Radio