Gas prices rise to new national record, driven by crude oil's own record-breaking rally

NEW YORK — The cost of filling up the family car jumped 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.

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

On Tuesday, light sweet crude for April delivery surged to a new record of $109.72 on the New York Mercantile Exchange before falling after the International Energy Agency cut its forecasts for crude consumption this year. In morning trading, crude futures fell 62 cents to $107.28 a barrel.

Where oil goes 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 prices will likely spike as high as $3.50 to $3.75 a gallon, regardless of what happens with oil prices.

That doesn't sit well with some consumers.

"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 gassing up near his New Jersey restaurant job one recent afternoon. "I'd feel cheated at that point."

Still, because gas is so expensive, analysts expect demand for fuel will rise more slowly this spring and summer than in previous years. Nationwide demand for gasoline is off by about 1 percent over the last 6 weeks, a trend analysts expect to accelerate if prices keep rising.

"It evokes a real reaction in demand destruction above $3.25 a gallon," Kloza said.

The effect can be seen in states such as California, where prices are consistently 30 cents higher than the national average. Last November, the latest month for which data is available, demand for gasoline fell by 3.7 percent from the previous year in California as prices soared past $3.40 a gallon.