Gas price hikes ahead

With oil and gasoline touching all-time highs again Monday, raging energy-price fever showed no sign of breaking. Before it’s over, oil could cost at least $125 a barrel and gasoline more than $4 a gallon in California.

Even if oil were to stop its frenzied record-a-day pace, gasoline costs would probably keep rising for several weeks as past oil price increases trickled down to the pump and the summer driving season revved up.

“Every day there is a new irritant” propelling prices higher, said John Kilduff, head of energy risk management at MF Global in New York, citing the continued weakness of the dollar, violence near oil installations in Nigeria and declining Russian production.

Another factor lending strength to the surge is the apparent willingness of Americans to put up with runaway prices.

“We’re not hearing the chatter. We’re not hearing about boycotts or picket signs at gas stations like we did with earlier price hikes years ago,” said Jason Toews, co-founder of the Gasbuddy.com website chain, where motorists report the highest and lowest prices they see.

Edward Leamer, director of the UCLA Anderson Forecast, said that high prices and a weak economy used to make consumers freeze their spending, a kind of “deer in the headlights” syndrome. Now, Leamer said, Americans are continuing to spend beyond their means no matter what.

“The deer have decided to cross the highway,” he said, “and are just hoping to not get hit by a truck.”

Sam Roberts of Laguna Beach has grown weary of hunting for cheap gas. The computer systems consultant said he usually would buy from whatever station was closest when his tank started to run low. On Monday morning, he passed $3.99-a-gallon gas in Newport Beach, only to find nothing better than $3.91 at a Chevron in Laguna Hills. He bought 12 gallons for his late-model Altima sedan, saving 96 cents.

“You get tired of looking for bargains because there are no bargains,” he said.

On Monday, the Energy Department’s weekly survey of gasoline stations found that the average price nationally for a gallon of self-serve regular had climbed 11.9 cents during the last week to a record $3.508.

Gasoline prices began rising in February along with oil prices, and the U.S. gas-price average is now 64 cents higher than it was a year ago.

It was most expensive in California, where the average price for self-serve regular jumped 7.2 cents to a record $3.846 a gallon -- 53 cents higher than a year ago. The average cost of premium passed the $4 milestone, hitting $4.053 a gallon.

Motorists shouldn’t expect relief anytime soon. Even if crude oil prices drop substantially from their own lofty heights, gasoline prices are still playing catch-up at a time when warmer weather encourages more motorists to hit the road.

“We are predicting the U.S. monthly average price to rise to $3.60 by May or June, with some weekly averages higher than that,” said Doug MacIntyre, a senior oil market analyst for the Energy Department’s Energy Information Administration. “West Coast averages will be around $3.90, probably pointing to $4 in at least some parts, at some times, like California.”

Crude oil for May delivery also showed no sign of losing its momentum, rising 79 cents to close at $117.48 a barrel on the New York futures market. In electronic trading after the market closed, oil reached as high as $117.83. And the worst probably isn’t over.

“We could see $125-a-barrel oil and $3.80-a-gallon gasoline nationally and over $4 in a lot of higher-priced markets like California,” Kilduff said.

Speculators were blamed for a significant amount of the ratcheting up of oil trading, but some analysts said that strategies of U.S. policymakers were contributing.

“We continue to watch the value of the dollar drop as the Fed drops interest rates, driving up the cost of oil, which is traded in U.S. dollars,” said Fadel Gheit, senior oil analyst for Oppenheimer & Co. in New York. The cheap dollar makes oil less expensive for buyers with foreign currency and attracts investors looking for an alternative to stocks.

Gheit added that the Bush administration’s continuing buildup of the Strategic Oil Reserve was boosting prices.

“For the world’s biggest consumer of oil to do this is sending the wrong signal, that you expect something ominous, something catastrophic to happen like war with Iran. The message that sends to the rest of the world is music to the ears of the speculators,” Gheit said.

Irvine business owner Mitch Goldstone is doing a little speculating of his own, using gasoline to lure back some of the revenue he has lost because of high gasoline prices. About 90% of his business comes through his website, up from about 30% a year ago -- a change he attributes partly to fuel prices. That’s a problem, he said, because online customers spend less than those who come into his shop, ScanMyPhotos.com.

So starting Monday morning, Goldstone began handing out gift cards worth $5 to $25 in Chevron gasoline to customers who brought photos into the store to be scanned onto discs. Goldstone is hoping the cards will accomplish what the complimentary Haagen-Dazs ice cream bars and fancy Voss Norwegian spring water can no longer manage: entice customers to get back into their cars and SUVs.

“So many of my friends who own small businesses say that their customer traffic has just stopped. They’re in gas price shock,” Goldstone said. “We have to do something about that, and other businesses are going to have to do the same thing.”

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ron.white@latimes.com