Gas prices continue their climb

Gasoline prices in the Philadelphia area rocketed up an additional 4 cents a gallon yesterday, a brutal greeting for the start of the summer driving season.

The increases brought the average cost for regular-grade gasoline to the brink of the $4-a-gallon level, according to figures from AAA Mid-Atlantic, which tracks pump prices daily in the region.

"We're all reluctant to hit that $4 mark," said Steve Kehler, who runs a Sunoco station and repair shop on West Chester Pike in Havertown.

Raising prices from $3.99 to $4, he said, will have more of an impact on sales than a typical 1-cent hike, he said. "It's a psychological thing."

Yesterday's average price for regular-grade in Philadelphia and the four suburban counties in Pennsylvania was $3.91, up from $3.87 on Thursday, according to AAA Mid-Atlantic.

In the three suburban counties in South Jersey, the average yesterday was $3.74 compared with $3.70 on Thursday.

AAA said 46 stations in the eight-county area already were charging $4 or more yesterday - 45 in the five Pennsylvania counties, and one in Voorhees, Camden County. At the beginning of this week, just five local gasoline stations were at $4 for regular.

The highest local price for regular was at a Lukoil station in New Hope - at $4.299 a gallon.

In a small sign of the times, Gov. Rendell yesterday relaxed Pennsylvania rules to allow older pumps to measure gasoline prices by the half-gallon rather than in full gallons. The reason: These non-digital gasoline pumps cannot compute prices of more than $4 a gallon. That makes it necessary for them to display prices by the half-gallon until upgrades are made, Rendell said. The change will affect about 500 of the state's 108,000 gasoline pumps.

The half-gallon pricing won't ease the pain for motorists, though. "The total cost of gas will remain the same," Rendell's statement advised.

So far this year, Kehler at the Havertown Sunoco station said, high prices have cut demand for his gasoline by about 27,000 gallons a month. He's not eager to pass the $4 mark, cutting demand further.

When the time comes, Kehler said, he may hold prices steady at $3.999 a gallon for days and accept a steadily shrinking profit margin rather than be the first station in his area to post $4 a gallon for regular gas.

"You don't want to price yourself out of the market," he said.

Seven states had average pump prices of $4 a gallon or more yesterday - Alaska, California, Connecticut, Hawaii, Illinois, Michigan and New York, AAA said. The highest was Alaska at a $4.18 average.

In Pennsylvania, yesterday's average was $3.88, and it was $3.74 in New Jersey.

Nationally, consumers faced the sobering reality that it now costs $87 to fill a Ford Explorer SUV, up $14 from last year, and $72 to fill a midsize Honda Accord, up $12.

But unlike this time last year, when gas prices were at their peak for 2007, pump prices now show no signs of halting their daily assault on the record books.

Nationally, the price of a gallon of regular gas rose 4.4 cents yesterday to a record average of $3.875, according to AAA and the Oil Price Information Service.

"We're going to see some more significant increases here in light of what we've seen in the last few days," said Tom Kloza, publisher of the Oil Price Information Service in Wall, N.J.

Oil prices fluctuated yesterday afternoon as investors placed bets before the long holiday weekend. Light, sweet crude for July delivery rose $1.38 to settle at $132.19 a barrel on the New York Mercantile Exchange, after alternating between gains and losses.