Oil price reaches record high
In addition, Saudi Arabia, the world's largest oil producer, has said it does not see a need to increase oil production.
NEW YORK (AP) — Oil prices surged more than $3 Friday, shattering a previous record in a spike near $128 a barrel, as prices at the pump pushed to new highs of their own.
The gains come 10 days before the Memorial Day holiday, the traditional start of the peak U.S. summer driving season, suggesting that retail gas prices have further to rise.
Americans are now paying a national average of $3.787 a gallon for regular gasoline, up nearly a penny from the previous day, according to AAA and the Oil Price Information Service.
Diesel prices also have risen to record levels, meaning that even Americans who don't drive will likely face even higher prices on all sorts of goods because of increased shipping costs. A gallon of diesel now sells for $4.482 a gallon.
Light, sweet crude for June delivery rose as high as $127.82 a barrel on the New York Mercantile Exchange, before easing somewhat to trade up $2.64 to $126.76 . The contract settled at $124.12 Thursday.
Oil prices could rise even higher as U.S. demand picks up during the summer months, when gasoline consumption is typically the heaviest.
Still, Saudi Arabia, the world's largest oil producer, does not see enough demand from customers to increase oil production, the White House said Friday morning. President Bush was in the oil-rich Gulf kingdom in part to lobby for an increase in crude output.
Also pushing oil prices up were speculation that China's demand for diesel needed to fuel its power plants would rise due to reconstruction efforts after this week's earthquakes and an upward revision of an oil price forecast by investment bank Goldman Sachs from $107 to $141 a barrel for the second half of the year.