Gas price hits record, but decline seen in June

WASHINGTON — The U.S. average gasoline price set a new record Monday, eclipsing highs seen following Hurricane Katrina.

But a number of analysts, including those at the Oil Price Information Service and A.G. Edwards, say a peak should come soon.

The U.S. average for a gallon of regular gasoline was $3.073 Monday, up less than a penny from Sunday, when the record was first broken, according to motorist club AAA and OPIS. Adjusted for inflation, the record is $3.223 in today’s dollars set March 1981, according to the Energy Department.

The nationwide average price at the pump Monday was up 24 cents from a month ago and 17 cents higher than this time last year, according to AAA.

The gains have come in response to strong demand at a time when refinery shutdowns have cut supplies. But refinery production has risen in recent weeks and demand is starting to ease in response to the higher prices. The combination means prices should peak soon.

“They’ll level off and probably decline in June,” says Bill O’Grady, assistant director of market analysis at A.G. Edwards in St. Louis. But O’Grady warns that prices won’t drop “precipitously” and will likely come back a bit before Labor Day.

While rising gasoline prices are a nuisance for those with higher incomes, they can lead consumers at the lower end to reduce spending in other parts of the economy.

Retailers such as Wal-Mart partly blamed rising gasoline prices for slow sales in April. Retail sales fell 0.2 percent following a 1 percent gain in March, according to the government.