NEW YORK - Retail gas prices rose further above a national average of $4 Monday, and are likely to keep rising as distributors and retailers hike prices in response to last week's unprecedented oil price rally.
Oil futures, meanwhile, retreated after Treasury Secretary Henry Paulson said he wouldn't rule out intervention to stabilize the dollar - boosting the greenback against the euro - and after Saudi Arabia said it would call for a meeting to discuss crude prices that it called unjustifiably high.
At the pump, the national average price of a gallon of regular gas rose 1.8 cents overnight to a record $4.023, according to AAA and the Oil Price Information Service. Prices first moved above $4 nationally on Sunday, though they've been higher than that in many parts of the country for weeks.
If oil prices remain near $139 a barrel, last week's record high, gas prices will likely rise another dime in coming days, said Tom Kloza, publisher and chief oil analyst at the Oil Price Information Service in Wall, N.J.
'The numbers do have some catching up to do,' Kloza said. 'There's a bit of a tape delay that happens with gasoline.'
AAA spokesman Geoff Sundstrom thinks prices could rise another 2 to 3 cents.
Consumers are cutting back on their consumption of gas in response to the high prices, but gasoline producers have little choice but to keep raising prices when the cost of their chief raw material - crude oil - rises. Friday's jump of nearly $11 in oil prices put new life into gas prices, which had appeared to be topping out.
High fuel prices are also causing a shift in consumers' car-buying habits; General Motors Corp. announced plans last week to close four pickup truck and SUV plants, saying high fuel prices have cut sales. At today's prices, it costs nearly $91 to fill a Ford Explorer, up from $70 a year ago. At 14 miles per gallon in city driving conditions and 20 mpg on the highway, a person who drives that Explorer 25 to 40 miles to and from work - not to mention chauffeuring kids around - has to gas up a couple of times a week, at least.
At $150 a barrel - the Morgan Stanley price prediction that helped ignite Friday's oil rally - gas would cost about $4.40 a gallon, Kloza said.
Gas prices often peak around Memorial Day, then retreat over the course of the summer. But this is far from a normal year. Oil prices have been marching steadily higher since last fall, and occasional price corrections of $10 or more have been followed by rapid rebounds to new heights. Last week, oil prices rose nearly 14 percent in two days, trading as high as $139.12 a barrel, after slumping more than $13 from a previous record high.
On Monday, light, sweet crude for July delivery fell $4.19 to settle at $134.35 a barrel in volatile trading on the New York Mercantile Exchange.
In an interview on CNBC Monday, Paulson said he would not rule out the possibility of intervening to stabilize the dollar, though he declined to speculate about what the government might do. The dollar strengthened against the euro on Paulson's comments, sending oil lower.
Many investors buy commodities such as oil as a hedge against inflation when the greenback weakens. But on Monday, the effect reversed; the dollar gained ground, making oil less effective as an inflation hedge. Also, a stronger dollar makes oil more expensive to investors overseas.
Oil's sharp jump last week began Thursday, after European Central Bank President Jean-Claude Trichet suggested the bank could increase interest rates in July to counter rising inflation. That sent the dollar falling against the euro.
Meanwhile, Saudi Arabia said Monday it will call for a meeting of oil producing countries and consumers to discuss soaring oil prices. Information and Culture Minister Iyad Madani said the kingdom will work with OPEC to 'guarantee the availability of oil supplies now and in the future.' He also said the current price of oil is unjustified.