Gas prices hit record $3.20

The average price of a gallon of regular gasoline at U.S. filling stations rose to a record $3.20 last week, an industry survey showed, threatening to further shake consumer sentiment as the nation hovers on the brink of recession.

The price rose 9 cents on Friday from two weeks earlier, according to oil industry analyst Trilby Lundberg's survey of 7,000 filling stations nationwide. Gasoline futures rose Friday to $2.6943 a gallon on the New York Mercantile Exchange, the highest closing price for a contract closest to delivery since the reformulated fuel began trading in 2005.

Rising gasoline prices and shrinking payrolls are taking a toll on the confidence of consumers, whose spending makes up two-thirds of the economy. Gasoline prices are likely to rise more, leaving Americans less to spend on other goods.

"We will probably see 20 or 30 cents more at the pump very soon, possibly within a month," Lundberg said Sunday. "This is all if crude oil prices don't slide substantially, and it doesn't seem likely that they will."

Spending at U.S. retailers probably slowed in February, a Bloomberg survey of economists showed. Purchases rose 0.2 percent last month after a 0.3 percent gain in January, according to the median estimate in a survey before this week Thursday's Commerce Department report. Figures from the Labor Department the following day may show the cost of living increased.

The previous record of $3.18 a gallon, set in May 2007, remains the highest on an inflation-adjusted basis, Lundberg said. Rising prices have caused demand for gasoline to fall 1.3 percent from a year ago to 9.07 million barrels a day, a U.S. Energy Department report on Wednesday showed.

Crude-oil futures climbed to a record $106.54 a barrel on Friday. Oil prices increased as the dollar weakened to a record low against the euro. The euro climbed to $1.5459 on Friday, the highest since the currency's debut in 1999.

Last week, the Organization of Petroleum Exporting Countries refused to raise production after President Bush said it would be a mistake to let high energy prices slow the economy.

Oil also rose after Venezuelan President Hugo Chavez sent 10 tank battalions to the border with Colombia in response to a Colombian air raid against a guerrilla camp in Ecuador. Venezuela and Ecuador are the only OPEC members in the Western Hemisphere.

The highest average price for self-serve regular gasoline was $3.58 a gallon in San Francisco, Lundberg said. The lowest was in Cheyenne, Wyoming, at $2.95 a gallon. On New York's Long Island, the price was $3.30 a gallon.

The Reuters/University of Michigan index of consumer sentiment decreased to 70.8 in February from 78.4 in January, according to a Feb. 29 report. The measure was the lowest final reading since February 1992.

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Contributing: Margot Habiby and Mark Shenk

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E-mail: jburke29@bloomberg.net; jemoore@bloomberg.net