Gas Prices Surge as Oil Hits Records

March 11, 2008— -- NEW YORK (AP) -- The cost of filling up the family car climbed to a record high Tuesday, adding to the challenges consumers already face with falling home values and rising food prices.

Gas prices at the pump rose overnight to a record national average of $3.2272 a gallon, according to AAA and the Oil Price Information Service. That's a tad higher than the previous record of $3.2265, set last May.

Soaring gas prices worsen the financial plight of consumers already suffering through a downturn in the housing market that has sharply reduced home prices in many markets and limited Americans' ability to tap home equity for spending. Food prices are also on the rise, partly due to rising fuel costs.

"I used to think three bucks a gallon was all I'd pay, but I keep filling up," said Joe Gowans while gassing his Acura SUV in San Francisco one recent afternoon. "You have to use it."

A year ago, rising demand and a string of refinery outages had raised concerns about supplies. Now, the record price of crude oil is the culprit, propelling gas higher although supplies are at 15-year highs.

On Tuesday, light sweet crude for April delivery surged to a new trading record of $109.72 on the New York Mercantile Exchange before retreating after the Energy Department and International Energy Agency cut crude consumption forecasts for this year. Futures settled 85 cents higher at $108.75 a barrel, a new record.

Where gas and oil go from here is anybody's guess. Many analysts expect prices to moderate, while others predict oil could keep rising to $120 a barrel, or higher. And with demand for gas expected to rise as warm weather arrives, analysts say pump prices could spike as high as $3.75 a gallon, regardless of what happens with oil prices. The Energy Department on Tuesday raised its forecast of how high prices will rise this spring by a dime to $3.50 a gallon.

"I've got to say, if they ever go up to $3.50, that would be the point where I'd feel angry," said Alex Magby, a Morrisville, Pa., resident who was filling up his tank near his New Jersey restaurant job one recent afternoon. "I'd feel cheated at that point."