Oil prices jumped to a new high above $70 a barrel Monday and ignited fresh fears at the gas pump, where drivers seem to be paying more every day.
At one Chevron station in downtown Los Angeles, motorists had to fork over $3.35 a gallon on Monday. And that's for self-serve regular.
Such high prices so early in the year -- before the demand from summer travel kicks in -- have some energy experts predicting that records could continue to fall in the coming weeks. And economists warn that supercharged energy prices could rekindle inflation across the economy and restrain free-spending consumers.
"If it stays at this level for about six months or so, you will see the prices of other products and services increase," said Chapman University economist Esmael Adibi.
Expensive energy already is being felt, he noted, with major airlines linking higher fares to jet fuel costs. Another sign: Eastman Kodak Co. said Monday that it planned to charge 17% more for film to cover the rising cost of the silver and oil used to produce it.
On the New York futures market Monday, traders sent the May contract for benchmark light crude up $1.08 to close at $70.40 a barrel, beating the previous record of $69.81 a barrel reached Aug. 30 as Hurricane Katrina was walloping the Gulf Coast.
Stocks slipped on rising gold and energy prices, with the Dow Jones industrial average losing 63.87 points to end at 11,073.78.
Energy markets are being roiled by the West's nuclear stare-down with Iran and a possible oil production shutdown in Nigeria. The price move reflected the market's nervousness because global supplies barely cover demand, and major oil-producing countries have little extra capacity to make up for output lost to unexpected events.
"Every time we get some good news, we get bad news. Right now, a very good target for crude oil is $75," said Phil Flynn, senior market analyst for Alaron Trading Corp. in Chicago. A major disruption in a production hotspot could cause oil prices to soar to $90 a barrel or more, analysts said.
"If something drastic happens, the worst would be $100," said Steve Bellino, senior vice president for energy risk management at Fimat USA Inc., a New York commodities trading firm.
Leaping oil prices and regional supply factors continue to be felt at the gas pump, with the average U.S. price for a gallon of self-serve regular jumping a dime in the last week to $2.783, the Energy Department reported Monday.
