More drivers forced to cope with $4 gas

Times Staff Writer

Gasoline prices rose sharply across much of the nation over the last week, although California drivers got off relatively easy, the Energy Department said Monday.

Oil prices took a rare step back Monday from their upward climb, but analysts warned that the day's dip probably was just a pause for profit-taking.

The average U.S. retail price for a gallon of self-serve regular gasoline jumped 10.9 cents to a record $3.722, which was 62 cents higher than a year earlier, according to the Energy Department's weekly survey of filling stations.

The surge was led by the Midwest, where the average increased 15.7 cents to $3.736 a gallon.

But even those numbers didn't tell the whole story.

Motorists woke to $4-a-gallon gasoline in increasing though still rare frequency in Alaska, Washington, Nevada, Arizona, Michigan, New York, Connecticut and Massachusetts, according to the nationwide system of websites called, where members report prices. In California, $4 gasoline can be found in every corner of the state.

A steady pattern of fresh all-time highs in oil futures trading is behind the relentless increases at the pump.

Crude oil for June delivery fell $1.73 to close at $124.23 a barrel on Monday at the New York Mercantile Exchange. But "it's not over yet," said John Kilduff, vice president for risk management for MF Global in New York.

"Today, we heard about another raft of refinery problems and no one is sure what the earthquake tragedy in China will mean. The oil markets are probably just taking a breather here before they continue higher," Kilduff said, noting that global demand was still running ahead of supply.

The big exception on the gasoline price front was found in California, where the average rose by just 1.6 cents to $3.919, the Energy Department said. Even veteran analysts said they were surprised to find that the price of gasoline on wholesale markets in California was running 1 or 2 cents below the New York commodities market, something they said was extremely rare.

"Today is the first day I can recollect since the hurricanes in the Gulf [of Mexico] in 2005 that California wholesale prices are running below the futures market. It's the rough equivalent of someone getting an offer today for a below-prime-rate-interest credit card," said Tom Kloza, chief oil analyst for the Oil Price Information Service in New Jersey.

Kloza and another expert, former West Coast fuels trader Andrew M. Lipow, said in separate interviews that the wholesale numbers were a sign that declining demand for gasoline was beginning to influence prices.

"Demand is off in California, and if this kind of activity continues across the rest of the country, that will begin to push prices down," said Lipow, president of Houston-based Lipow Oil Associates.

The most recent figures available from California's Board of Equalization showed that the state's gasoline consumption in January was 4.5% below the same month in 2007 and down 8.6% compared with December.

One person who says he has noticed a shift in behavior is Luis Morris, a transportation management specialist for the city of Santa Monica, where he says more businesses are asking about car pools and van pools. Increasing numbers of visitors are taking advantage of free valet-style parking for bicycles at city events and other activities, he said.

"For Earth Day, we parked 1,000 bicycles at the Santa Monica Pier. The old record had been 650 bikes for the Los Lobos concert at the pier last August," Morris said.

"More people are going to the farmers markets and on other errands on their bikes," he said. "People are just tired of these prices."


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