E.V. gas hits record $3.44 a gallon

Gasoline prices in the East Valley on Thursday hit a record high of $3.44 a gallon on average and are expected to continue to climb, according to AAA Arizona and fuel analysts.

Scottsdale motorists are paying even more for gas — $3.49 a gallon on average. At the same time, prices jumped nearly 3 cents overnight to set a national record of nearly $3.65 a gallon, according to a survey of stations by AAA and the Oil Price Information Service.

The highest prices in Arizona are in Yuma, where a gallon costs a record $3.53. Diesel prices also rose, adding 9 cents overnight to match a national record of $4.25 a gallon. In the East Valley, diesel is $4.14.

With crude oil prices likely headed higher, it’s widely expected that the average price of gas will soon rise as high as $4, according to price trackers.

Motorists in many areas, including parts of California and Hawaii, are already paying that much, or more. “If oil prices go the way that pundits are expecting, there’s no way we’ll stay under $4 a gallon,” said Fadel Gheit, an analyst at Oppenheimer & Co. in New York.

The price of light, sweet crude oil for June delivery fell $1.32 to $122.21 a barrel Thursday on the New York Mercantile Exchange. Prices rose as high as a record $123.93 on Wednesday.

Expectations that the dollar will continue to weaken against foreign currencies including the euro are likely to keep pushing oil to record highs, Gheit said.

Goldman Sachs analysts recently predicted prices will rise to as high as $150 to $200 a barrel within two years. That forecast has driven much of oil’s gains in recent days.

Analysts at Goldman and firms such as Barclays Capital believe tight global supplies and growing demand from fast-growing economies in countries such as China and India are driving oil higher. But Gheit and analysts including Tim Evans at Citi Futures Perspective argue that supply and demand fundamentals don’t support such high prices.

“There is no reason why oil prices should be above $60,” Gheit said, noting that domestic crude supplies are at average levels, and that refineries are cutting gasoline production as high prices cut consumers demand for fuel.

“The physical supplies do not justify the price, it just doesn’t make sense.”