PUMPED UP GAS PRICES SOAR TO A NEW LEVEL.

Byline: Brent Hopkins Staff Writer

Gasoline and diesel prices shot to record highs Monday in Los Angeles and experts warned that consumers can expect to pay even more at the pump in the months ahead.

In Los Angeles, the Automobile Club of Southern California reported an average price of $2.642 per gallon for regular, a hike of nearly 4 cents overnight and 52 cents over the same date last year. This eclipsed the previous apex of $2.625, reached April 13.

Diesel, tied more closely to a temporary shutdown at Chevron's El Segundo refinery, leaped nearly 12 cents, to $2.983, on Monday.

Concerns over world supply, stoked by the decision to close the American Embassy and consulates in Saudi Arabia, pushed crude oil to a record $63.94 per barrel on Monday.

Locally, things aren't looking much better, with supply constrained by Chevron's production problems expected to linger until later in the week. Additionally, demand at the end of the summer is running higher than expected, forcing prices upward.

``Some of these things will go away, like the nervousness, as refineries come back and the embassy gets reopened,'' said Doug MacIntyre, an oil market analyst with the federal Energy Information Administration.

``But we're likely to see these high prices for some time. We might have to wait and hope for a warm winter, but other than that, there doesn't seem to be much to make prices decidedly lower.''

He predicted that national prices, which the Auto Club currently pegs at $2.339, will stay above $2 for the rest of the year and into 2006. California, due to its special clean-burning forms of fuel, faces an even tighter supply and thus higher prices.

``Diesel's caused by an event, gasoline's caused by demand,'' said Paul Gonzales, an Auto Club spokesman. ``You can fix the event, but demand takes a lot longer to deal with. It's summertime, so people want to go out and have a good time. It's 25 percent more expensive to fill up than it was a year ago, but they're willing to pay.''

Nationally, the oil industry has been racing to meet that demand.

Its trade group, the American Petroleum Institute, reports that last week the country's refineries operated at 95.9 percent capacity, cranking out 17.12 million barrels per day. To augment the supply, oil companies have been importing 547,000 barrels per day, the highest level in five years and a 16.8 percent increase since the beginning of 2005.

While predicting that the roiling oil market should settle sometime soon, Rayola Dougher, API's manager of energy market issues, noted that prices always seem to find a way to climb higher.

``A month ago, they were saying $50 a barrel was high,'' she said. ``I don't think anyone knows where it's going to go. I've seen some studies that are more optimistic, but most are not wildly enthusiastic.''

Though some diesel pumps already have posted prices above $3, gasoline users probably won't have to worry about that mark yet. Denton Cinquegrana, markets editor for the Oil Price Information Service, said that if Chevron can get its refinery online by the end of the week, prices for both products should fall, staving off the much discussed $3 per gallon price tag.

``We're far enough into the driving season that we shouldn't get there, but you never say never,'' he said. ``If you had a refinery breakdown again, all hell breaks loose.''

Brent Hopkins, [phone]

brent.hopkins(at)dailynews.com

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SOURCE: fuelgaugereport.com