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Gasoline prices in Utah on Monday rose above the national average for the first time since mid-January, according to AAA Utah, with some national analysts saying prices driven by demand for fuel could top $4 a gallon.
A gallon of unleaded regular gasoline in Utah is at an average of $2.88 at self-serve pumps. Nationally, the average is $2.85, AAA said.
Fuel prices are rising across the country at a pace not seen since Hurricanes Katrina and Rita knocked out a third of the U.S. oil refining industry in 2005. Gasoline consumption is climbing twice as fast as last year and will accelerate when summer travel begins late next month.
"We usually see gasoline prices climbing this time of year," said Rolayne Fairclough, spokeswoman for AAA Utah. "Still, it isn't something that anyone wants to see."
Utahns shouldn't feel alone.
''What we're surprised by is the increased demand,'' said James Mulva, chief executive officer at ConocoPhillips, whose refineries from California to New Jersey produce enough to meet 14 percent of the country's needs. ''Even though the price of gasoline is up, the demand is up.''
Americans seem resigned to higher prices, says David Pursell, a principal with Pickering Energy Partners, a consulting firm in Houston.
''Last year, we had pump prices well over $3 for the summer and gasoline demand was up. Would $4 gasoline cause demand contraction? I think it will, but I also thought $3 gasoline would.''
Fairclough noted that the national average cost for a gallon of self-serve unleaded gasoline is 5 cents lower than it was a year ago. The average price in Utah is 31 cents higher than a year ago, apparently driven by population and job growth, which in turn increases demand.
Fairclough maintains that any significant increase in the price of gasoline should cause consumers to react by changing their driving habits.
She said it's important to note that in California, which typically sees among the highest prices in the country, gasoline consumption was down last year.
"It was just a 1 percent consumption decrease, but it still was significant given that California's population increased, as well," Fairclough said.
Everything is relative, though.
Dale Shaw, who owns a fence company in Oceanside, Calif., and Robert Rayford, who works in security at the nearby San Onofre Nuclear Generating Station, were vacationing in Salt Lake City on Monday and were delighted with the cost of gas.
"We just filled up for what, $2.69 a gallon?" Shaw said. "Back in the San Diego area, we get gouged more than anywhere else in the country. And right now the price is around $3.30 a gallon."
"Prices around here aren't too bad," Rayford said.
Over the long run, Utah's gasoline prices typically mirror the national average, but they often react more slowly to price changes in the rest of the country. And that may help explain why gasoline prices in the state have increased so quickly this spring - they're catching up with the national average.
Peter Beutel, an analyst at Cameron Hanover Inc. in Stamford, Conn., who helps industrial consumers manage energy costs, said pump prices in the United States may increase to $4 a gallon, especially if hurricanes threaten Gulf of Mexico refineries.
''Hurricanes are always the huge wild card. We're all praying for a year like 2006 rather than 2005.''
Last year, when the average price of a gallon of gasoline rose above the national average and stayed there for months, Utah Gov. Jon Huntsman Jr. ordered an investigation. The result was a report that blamed profit-gouging by retailers as the cause of the unusually high prices.
Utah Department of Commerce Director Francine Giani, who led the state's investigation, said Monday that the high prices in Utah are "unfortunate, but they're probably not illegal."
She noted that last year when pump prices rose in Utah, the state's residents responded.
"Ridership went up on both TRAX and buses," she said. "Utahns will be facing those kinds of choices from now on. I don't believe we're ever going to see $1 a gallon gasoline again."
The increase in fuel costs threatens to quicken inflation and restrain consumer spending. An appreciation to $4 a gallon would add more than $10 for a driver who fills the 12-gallon tank of a Toyota Prius. The owner of a Ford Expedition sport-utility vehicle with a 34-gallon capacity faces an increase of almost $40.
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* BLOOMBERG NEWS contributed to this story.