Gas prices soar in U.S. and California as Mideast unrest continues

The nation’s gasoline costs are surging at a pace not seen since Hurricane Katrina shut down Gulf Coast refinery operations over the Labor Day weekend in 2005.

The average price of a gallon of regular gasoline in the U.S. leaped to $3.383, up 19.4 cents in the week that ended Monday, the Energy Department said, following oil prices higher on unrest in Libya and the Mideast. That was 68 cents higher than a year earlier, bringing the average to the highest it has ever been for this time of the year but still well below the national record of $4.114 a gallon reached in July 2008.

In California, the average climbed 16.4 cents to $3.719. That was 72 cents higher than the year-earlier price, and experts predicted that the state’s average would top $4 a gallon in the coming weeks.

Gas prices were already above $4 in some parts of Los Angeles, as Valerie Johnson learned when she used her smart phone to check prices on


“There’s not a single Westside station listed here for less than $3.99 a gallon,” said Johnson, a 28-year-old Los Angeles homemaker, after she pulled her Prius into a Mobil station in Santa Monica and found regular gas selling for $4.09 a gallon. “That’s just shocking.”

Crude oil prices eased somewhat Monday.

In New York futures trading, the U.S. benchmark West Texas Intermediate contract fell 91 cents to settle at $96.97 a barrel as confidence grew over the belief that Saudi Arabia would be able to fill any void produced by losses in Libyan oil. In London, the European benchmark Brent oil contract fell 34 cents to settle at $111.80.

Although the more expensive oil takes weeks to reach the pump, gasoline prices are reacting in advance as marketers anticipate higher costs.

Tom Kloza, chief oil analyst with the Oil Price Information Service, forecast that the average U.S. gasoline price soon would reach $3.50 to $3.75 a gallon and California’s average would surpass $4.

“We’re not at the top yet, although I hope we’re in the final innings,” Kloza said.

Concerns are mounting that increased fuel expenses could cause enough dismay among consumers to undercut an already weak U.S. economic recovery.

John Challenger, chief executive of Chicago-based global outplacement firm Challenger, Gray & Christmas, likened it to a surprise tax hike.


“This isn’t a discretionary purchase,” Challenger said. “People have to get to work. It’s fundamental, and when you raise taxes on people, consumer spending slows down.”

California has had bigger week-to-week increases than 16.4 cents. Between June 2 and June 9, 2008, the state’s average price for a gallon of regular soared 19.1 cents to $4.433. That was one week before the state’s all-time high of $4.588 a gallon was reached.

The nation’s biggest one-week increase came between Aug. 29 and Sept. 5, 2008, the week that Hurricane Katrina flooded New Orleans and shut down much of the Gulf Coast’s petroleum industry; prices jumped 45.9 cents to $3.069 a gallon.