10:06 AM PDT on Thursday, April 7, 2005

By kgw.com and AP Staff

Gas prices have reached record highs in Oregon and Washington and the cost could surpass $3 a gallon by this summer, industry officials and monitoring groups say.

(kgw.com Graphic)

The statewide average for self-serve regular unleaded in Wash. reached $2.319 a gallon Wednesday, a penny higher than the record set last year, AAA Washington reported.

"If history repeats itself, we'll be at $2.75 by the time school lets out," said Tim Hamilton, executive director of a statewide independent gasoline dealers' association. "If there's a small refinery disruption, we could go over $3."

The statewide average in Oregon was $2.33 Wednesday, compared to the previous high of $2.32, which was set on May 26, 2004, said AAA spokesman Elliott Eki.

The highest overall price in Oregon was reported in the Medford-Ashland area, at $2.476 a gallon.

"You want to feel what a buck's worth of gas feels like?" said White City resident Frank Marshall, after purchasing gas for his lawnmower at the Astro station in Medford. "It won't even start the car ... It'll start the lawnmower and only do half my lawn."

The national average Wednesday was $2.228, a further increase after breaking an all-time record last month.

Within Wash. state, average prices ranged from $2.431, in the Bellingham area to $2.20 around Bremerton.

"This is pretty early in the year to have reached the peak," said Janet Ray, AAA Washington spokeswoman for in Bellevue. "It's very probably going to keep increasing until — sometime. I wish I could say when."

AAA Oregon also reported a statewide record average price, $2.33 a gallon, a penny higher than the record set in May last year. Adjusted for inflation, however, prices have been higher.

Back in Oregon, Medford resident Barbara Bransford estimated she was paying almost twice as much for a tank of gas as she paid a year ago.

"I think it stings," Bransford said.

Oregon’s gas prices are the fourth highest in the nation. California has the most expensive gas at $2.48 a gallon.

After the Arab oil embargo that began in 1980, the national average price of a gallon of unleaded regular reached a high of $1.35 in 1981 — $2.89 in today's dollars, according to the Federal Reserve Bank of Minneapolis' inflation calculator.

Steve O'Toole, executive director of Oregon Petroleum Association, said crude oil prices were hovering between $56 and $58 a barrel Tuesday.

Southern Oregon had some of the highest prices in the state because it is the farthest from the gas pipeline, which ends in Eugene, he said.

Oregon doesn't have refineries, which makes it a more expensive market in general, he said. The closest refineries are in Washington.