Another Record for State’s Gasoline

Gasoline prices at the pump continued to soar over the last week, jumping more than 17 cents a gallon in California and 13 cents nationwide.

The average cost of self-serve regular in California rose to $3.068 a gallon Monday, a record high according to the federal Energy Department’s weekly survey.

The previous high came in early September after hurricanes Katrina and Rita disrupted fuel supplies and sent the statewide average up more than 28 cents in one week to $3.056 a gallon.

Meanwhile, a separate report by the American Automobile Assn. indicated that the average gasoline price across the state hit $3.117 a gallon Monday, a new record for the association’s survey.

Nationwide, the average cost of regular jumped to $2.914 a gallon Monday, but stayed below last year’s record post-hurricane level, according to the government survey.

But the number that mattered most for Matt Regan was the one listed on a Shell station pump in Encinitas, Calif.: $3.399 for a gallon of premium.

“I’m cringing,” said Regan, a mortgage salesman who was gassing up his silver Saab on Monday before driving up the coast for a meeting in Orange County. “And they’re saying it’s going to get even higher.... Next time I may just do a teleconference.”

Inside, Shell station manager Mark Vader wasn’t happy either. An hour earlier, he raised prices 7.5 cents across all grades of gasoline, putting regular self-serve at $3.199.

“It was a sad moment. That’s the highest we’ve ever been,” he said.

On one roadside sign, Vader had to post a handwritten “3” because he ran out of signs of the digit.

One problem is the rising price of crude oil, which accounts for about half of the cost of making gasoline.

Despite plentiful supplies in the United States, political tensions overseas pushed the price of oil futures last week above $75 for a barrel of the U.S. benchmark light sweet grade. Oil prices eased on the New York Mercantile Exchange on Monday, falling $1.84 to $73.33 a barrel for June delivery.

Oil refiners have been posting record profits for the last 12 months and Wall Street expects that trend to continue.

Gasoline prices, however, have lately been driven more by supply worries related to low fuel inventories and the oil industry’s abrupt decision to switch its gasoline additive to ethanol from methyl tertiary butyl ether, or MTBE, which has been found to contaminate groundwater.

Commodities traders fearful of possible supply glitches during the changeover sent U.S. gasoline futures to new highs this month.

On Monday, however, those prices dipped on the Nymex, falling 6.45 cents to $2.174 a gallon for May delivery.

Even so, analysts say more hikes are inevitable.

“At the pump, we still haven’t seen the worst yet,” said John Kilduff, a senior vice president at commodities trader Fimat USA Inc. Gasoline prices at more than $4 was “pretty likely,” he said, adding that somewhere in the country, a few stations would charge “upwards of $5 a gallon.”

Paul Gonzales, a spokesman for the Automobile Club of Southern California, is more optimistic.

“We should probably top out at about $3.25 a gallon in Los Angeles,” he said, noting that the average price in the city Monday was a record high of $3.133 a gallon, according to the AAA’s daily survey. “Gas prices should turn around this time next month, and we could see a pretty steep decline.”

Meanwhile in Encinitas, station manager Vader was weighing whether to order more “3” digits for his signs. Given recent price trends, Vader said “Maybe I won’t need to. Maybe we’ll [just] go to $4.”