At the pump, gas prices rose another 2.1 cents Friday to a record national average of $3.577 a gallon, according to AAA and the Oil Price Information Service. Gas prices have been following oil futures higher, but are also rising due to concerns about whether gasoline supplies are adequate to meet peak summer driving demand.
There is often a spike at the pump in the summer, but this time the rise in gas prices is extreme, reports CBS News correspondent Jeff Glor. The average fill-up is $8 more than it cost last year.
With gas prices higher than ever, in Florida, reports CBS News correspondent Peter King.
Soaring gas prices are driving some commuters to embrace the somewhat radical idea of taking public transportation in car-centric Los Angeles, reports CBS News correspondent Ben Tracy. Train ridership in the city has increased by 700,000 passengers over last year.
Analysts expect gas prices to continue rising for at least another month; predictions of how high prices will rise range from $3.70 to $4 a gallon. To a large extent, how high gas prices peak depends on what oil does.
Lately, analysts have recently raised their oil price predictions to $125 to $130 a barrel. Earlier this week, the expiring May crude contract rose as high as $119.90 as investors scrambled to square positions.
However, the Federal Reserve is expected to cut interest rates less sharply next week than originally thought. Because rate cuts tend to weaken the dollar, a smaller than expected cut could push the dollar higher, and send oil prices down.
Meanwhile, crude prices rose on initial reports that a U.S. ship had fired on two Iranian boats; the news raised concerns that a conflict between U.S. and Iranian forces could cut oil supplies from the region. Later reports said the origin of the boats was unclear.
But the news was enough to send light, sweet crude for June delivery up to $119.55 before the contract retreated to trade up $2.94 at $119.00 a barrel on the New York Mercantile Exchange.
The incident at first appeared to be the latest in a series of encounters between U.S. forces and Iranian boats in the Gulf. Early this month, the USS Typhoon fired a flare at an Iranian boat that came within about 200 yards of the ship. In January, several Iranian boats made what the Navy described as provocative moves near a U.S. ship in the Strait of Hormuz. And in December the USS Whidbey Island fired warning shots at a small Iranian boat officials said was rapidly approaching the ship.
On Friday, oil prices were already up before the report on news of a pipeline attack in Nigeria and a looming refinery strike in Scotland.
In Nigeria, the Movement for the Emancipation of the Niger Delta, or MEND, said its fighters hit an oil pipeline late Thursday, the fourth conduit the group has attacked in the past week. MEND said the pipeline belongs to a Royal Dutch Shell PLC joint venture. A Shell spokesman confirmed one of its pipelines had been hit, but provided no additional details.
Earlier this week, Shell said an earlier attack cut its Nigerian oil production by about 170,000 barrels a day.
Separately, workers at an ExxonMobil Corp. joint venture in Nigeria cut production by an unspecified amount to demand more pay.
Adding to the supply concerns, BP PLC said it will shut down a 700,000 barrel-a-day pipeline system that carries oil from the North Sea to refineries in the U.K. on Saturday in anticipation of a strike at Scotland's Grangemouth refinery expected to begin Sunday.
The refinery supplies power and steam to the pipeline; if it shuts down, the pipeline can't operate.
Oil's rise came as the dollar strengthened. A stronger dollar typically encourages selling by making commodities such as oil less effective hedges against inflation, and by making oil more expensive to overseas investors. Analysts say the dollar's steady decline over the past year is the chief culprit behind this year's rapid rise in oil prices.
But, notes Jim Ritterbusch, president of Ritterbusch and Associates in Galena, Ill., "that connection between oil and the dollar can be broken easily by supply issues," which drove trading on Friday.
In other Nymex trading Friday, May gasoline futures rose 3.79 cents to $3.0565 a gallon after earlier rising to a new trading record of $3.0815, and May heating oil futures rose 5.47 cents to $3.3028 a gallon. May natural gas futures rose 16.2 cents to $11.105 per 1,000 cubic feet.
In London, Brent crude futures rose $2.86 to $117.20 a barrel on the ICE Futures exchange.