Alaska first state to hit $4 a gallon gasoline: AAA

LOS ANGELES (Reuters) - Alaska hit a milestone on Wednesday that could be a sign of things to come around the United States this summer -- it became the first state where the average price for regular gasoline reached $4 per gallon.

"It wasn't totally unexpected," said Geoff Sundstrom, spokesman for the travel and auto group AAA which issues a daily gasoline price report.

"Oil prices recently brushed against $127 per barrel so certainly, $4 gasoline could be in the cards for other states as well this summer," said Sundstrom.

At $4 per gallon, filling up a 15-gallon tank will cost $60.

Alaskans using self-service regular gasoline paid $4.006 per gallon, said the AAA Wednesday report.

The U.S. average for regular gasoline hit a record $3.758 per gallon, the same report showed.

A year ago, the U.S. average price was $3.3354 a gallon and in Alaska, the average price was $2.946 a gallon.

Gasoline price analysts will have a better handle on how many states are likely to reach $4 a gallon this summer once the Memorial Day weekend passes, said Sundstrom. That holiday weekend is May 23-26.

"Memorial Day weekend is a little to the gasoline industry what Christmas is to retailers," said Sundstrom. "It's one of the highest demand weekends for fuel and is a barometer for what can be expected in summer driving season demand."

The AAA will issue its summer travel forecast on Thursday.

How much high prices cut into gasoline demand -- largely by cutting discretionary driving -- will go a long way to determining its price per gallon ceiling, Sundstrom said.

So far in 2008, U.S. gasoline demand has fallen 1 per cent from 2007, MasterCard Advisors said in a report issued earlier this week.

Earlier this month, the Petroleum Marketers Association of America said summer U.S. gasoline demand will decline this year for the first time since 1991.

After Alaska, states with the highest average prices for regular gasoline on Wednesday were:

-- Connecticut, $3.977

-- California, $3.947

-- New York and Illinois, $3.926

-- Hawaii, $3.894

-- Michigan, $3.891

-- West Virginia, $3.889

The U.S. Labor Department on Wednesday reported that nationwide, energy prices are up 16 percent from a year ago.

Crude oil prices rose to a record $126.98 a barrel on Tuesday from $62 a year ago, but fell to about $124 a barrel (42 gallons) on Wednesday, ending a streak of seven trading sessions achieving record highs.

(Editing by Christian Wiessner and Carol Bishopric)