Average price at pumps is $4.04
San Diego joins the growing list

The San Diego Union-Tribune, by Bruce V. Bigelow, staff writer, May 23, 2008 -- There was no rest for the wickedly expensive, as the average price for a gallon of regular gasoline blew past $4 yesterday to hit an unprecedented high of $4.04 across San Diego County.

The underlying pressures are so strong that more fuel price hikes appear inevitable, said Charles Langley of the Utility Consumers Action Network, who tracks local gas prices and reported San Diego's new record.

As many Memorial weekend travelers begin their road trips today, Langley advised, "The gas you buy tomorrow is going to be more expensive than the gas you buy today."

Perhaps even more surprising was yesterday's average price for diesel fuel, which hit $4.92 in UCAN's survey of local fuel prices.

"It's actually cheaper at a lot of stations to fill your tank with refrigerated milk than to buy diesel," Lanangley said. "A lot of stations are above $5 now."

Oil prices, meanwhile, fell to settle at $130.81 a barrel yesterday after setting a new trading record of $135.09 overnight. A stronger dollar gave some investors reason to sell oil futures to lock in profits from crude's record run.

Some signs also pointed to traders buying crude to exit from so-called short positions, which are financial bets that the price of crude oil will fall. With crude prices continuing to rise, Bloomberg News cited data from the New York Mercantile Exchange that indicated such traders were forced to buy crude to avoid even bigger losses on their wrong-way bets.

Concerns about falling supplies and rising demand are expected to keep propelling prices higher in the days and weeks to come. The Paris-based International Energy Agency said yesterday it has begun a reassessment of the world's 400 largest oil fields amid concerns that future crude supplies could be far tighter than previously thought.

Crude oil's price surge is putting pressure on broad areas of the economy - from steel, chemical and plastic manufacturers that use petroleum raw materials to trucking companies that haul food, clothing and furniture.

At the pump, the average national price of a gallon of regular gas rose 2.4 cents overnight to $3.83, according to a survey of stations by AAA and the Oil Price Information Service. Prices are 61 cents higher than a year ago.

"We're going to blast past $4," said James Cordier, president of Tampa, Fla.-based trading firms Liberty Trading Group and OptionSellers.com.

Prices may rise as high as $3.90 on a national basis by this weekend, he said.

San Diego and Bakersfield were the latest of 19 California communities to attain the dubious achievement of $4 gas, which helped carry the statewide average to $4 a gallon for the first time, according to the Auto Club of Southern California.

"There are more cities that are over than under," said AAA sposman Jeffrey Spring, who listed Santa Barbara, Santa Cruz and San Francisco among the 19 cities where the average price of regular gas exceeded $4 a gallon. "It probably would be a shorter list to give the cities that are under."

The Associated Press contributed to this report.

Bruce Bigelow: (619) 293-1314; bruce.bigelow @ uniontrib.com