Gas prices hit all-time high in California

The good news just keeps pouring in on our flagging economy.

In a release just out from AAA of Northern California, gas prices in the state hit a record high of $3.58, a 46-cent increase since the last AAA gas price report on February 12.

Here’s what AAA said:

SAN FRANCISCO, March 11, 2008 – The relentless surge in the cost of crude oil pushed gasoline prices to an all time high in California. According to a new report from AAA of Northern California, which tracks fuel costs as a service to consumers, the statewide average cost for a gallon of regular gasoline is now a record high $3.58, a 46-cent increase since the last AAA gas price report on February 12.

“The cost of crude oil, the raw material from which gas is made, has reached a record high price of $108 per barrel,” said Sean Comey, spokesperson for AAA of Northern California. “A year ago it was selling for about $60.”

Why crude has gone up so much is not entirely clear. The plummeting value of the dollar is one reason why oil prices have risen. Oil is bought and sold in U.S. dollars, so when they are worth less, it takes more of them to buy a barrel of oil. Falling currency values do not seem to be sufficient to account for the entire run up in crude prices. Financial speculation in the commodities market may also be one of the forces that has led to higher oil prices.

“The number of times a barrel of oil changes hands on paper between the time it’s pumped out of the ground and when it’s turned into gas at a refinery has increased significantly,” said Comey. “The people who are making these trades aren’t running charities. They’re trying to squeeze profit out of each transaction, and it stands to reason that would gin up the ultimate cost paid by the consumer.”

The most expensive average gas price in the Northern California communities where AAA monitors fuel costs is in Tahoe City, where regular unleaded sells for $3.75 per gallon. The lowest price among Northern California cities tracked by AAA is in Chico, where gas costs an average of $3.51 per gallon.

Throughout Northern California, the average price is $3.60, up 45 cents since the last AAA gas price report. In the Bay Area, the average price is $3.72, an increase of 42 cents from last month. The nationwide average price of self-serve regular gasoline is $3.23, up 27 cents from last month’s AAA gas price report. That ties the previous record high price.

The average statewide price in California is 35 cents per gallon higher than the national average. The least expensive gasoline in the country is found in Cheyenne, Wyoming, where regular unleaded costs an average of $2.97.

The highest average price in the nation is in Wailuku, Hawaii, on the island of Maui, where a gallon of regular unleaded costs $3.93. No state in the country now has an average gas price below $3.

Lisa Vorderbrueggen