Onward, upward for gas as it hits $3.42
NEW YORK - Retail gas prices climbed to a record $3.42 a gallon yesterday, fulfilling expectations that they'll near $4 as the summer driving season approaches.
Oil prices, meanwhile, fell slightly after setting yet another record high overnight. Analysts said investors were locking in gains from crude's ongoing rally.
At the pump, the average national price of a gallon of unleaded gas rose 1.9 cents overnight, according to a survey of stations by AAA and the Oil Price Information Service. Diesel fuel also set a record of $4.15 a gallon after jumping 1.7 cents overnight, the survey said.
Light, sweet crude for May delivery fell 7 cents from Wednesday's close to settle at $114.86 a barrel on the New York Mercantile Exchange, the contract's first lower close in a week.
With gas reaching another milestone, analysts are questioning whether consumers, who have already curtailed their driving over the past month, will cut back further in response to rising prices. They point to the trends seen last year in California; when prices soared past $3.40 a gallon there last November, demand plunged 3.7 percent.
Some analysts see California's experience as a sign that a drop in national demand could also occur. Still, when summer arrives, demand will rise regardless of how high prices have soared.
"July and August will be very busy," said Tom Kloza, publisher and chief oil analyst at Oil Price Information Service in Wall, N.J. "If you've got a vacation planned to Disney World . . ., you're still going to take the vacation."
This expectation of higher summer demand is boosting gas prices now, but prices are also rising because refiners are switching over from winter grade gasoline to the more expensive but less polluting fuel they're required to sell in summer. That has pulled supplies lower lately as refiners try to sell off all of their winter fuel. Short supplies of key blending components needed for summer gasoline are exacerbating the problem.
Oil, meanwhile, has spiked higher on concerns about falling supplies and rising global demand, and as a weaker dollar has attracted speculative investors to crude futures.
Crude hit a trading record of $115.54 overnight as the dollar fell to a low versus the euro, but fell back as the dollar strengthened. 