With oil trading just shy of $109 a barrel (as of the time of writing this oil is trading at $108.34 a barrel), it is little doubt that high gasoline prices are here to stay for a while, and with the high demand summer driving months just around the corner it seems very likely that we will set a new high over the next couple of months.

The current average for a gallon of unleaded is $3.83 a barrel, and has amazingly risen each of the last 26 days, is is up 29 cents over the last month alone.

Over the weekend, New York become the sixth state in the country to hit the $4 gas mark, and I expect to hear more states joining that list very shortly.

Share with us what you are paying for gasoline in your part of the world!

Investors continue to express concern that the stimulus package that was recently passed in the House is not going to get passed when the Senate gets its chance to vote on the new plan. There is still a good deal of concern over what the new package is going to do to address the ailing bank industry.

Consumer spending fell again in December, as the Commerce Department announces that personal spending in December fell by another 1%, as incomes dropped by 0.2% in the month as layoffs continue to mount. Analysts had been expecting to see consumer spending off by 0.9% in the month.

Look for another sell off on Wall Street, as futures are indicating a very sharp drop at the open. After the volatile week last week, many of us had some hopes that the Bush approved $700 billion bailout plan that was passed late on Friday would help spark a slight bounce, but that is not to be the case, and stocks are set for a much lower open to get the week started.

There is going to be a lot of pain out there today.

Oil crept through the $143 mark today, a traders continue to see oil as their refuge from a weak overall global economy. As recession fears continue to weigh on the minds of traders, they are flocking into commodities as a hedge against a possible full blown recession.  Supply concerns are also present today, and, as usual, we have some tension in the Middle East the continues to weigh on investor’s minds.

So how about those gasoline prices? Last month, I moved back to America after spending a couple years in Europe, and the harsh reality of gasoline prices is now something I am being forced to experience first hand. So long public transportation, and hello $4 gasoline. It’s tough, but its just something that is hard to avoid living in America. But just how bad are things? Overnight the national average creeped a little bit higher, and set a new record up at $4.086. Ouch.

There are two main factors at work today, strong earnings from computer giant Dell Computer (NASDAQ: DELL), and positive economic data on consumer spending that came out this morning.

DELL reported its first quarter numbers last night, and easily beat analyst estimates for the quarter, showing earnings of 38 cents per share, which was well above the 34 cents a share that analysts had been expecting to see. The company noted strong growth in both its consumer and commercial business lines as being key components to its strong quarter.

Also giving the market a boost this morning was the release of April consumer spending figures which showed a 0.2% rise in the month of April. This was in-line with what Wall Street was hoping to see, and a sign that the current economic slowdown and record high gasoline prices has not kept Americans from spending.

Last week it had started to look as though the dollar was making a comeback, but that has changed, and now the dollar is once again dropping, and as a result oil prices are moving into new territory. The euro is moving higher, and is now sitting above $1.5750 in Asian trading.

To put things more in perspective as far as just how strong oil prices have been moving lately… today is the 11th time in the last 13 trading sessions that oil has hit an all time high, or record high closing price… or both.

The bottom line is that, unfortunately, if you were hoping to see some relief in your gasoline prices, don’t hold your breath. The way oil is moving we could be looking back at $4 gasoline as the “cheap days”. Let’s hope that is not the case.

According to the Labor Department, inflation moved up 0.2% in April, which was slightly under the 0.3% inflation in March. Analysts had been expecting to see inflation rise by 0.3% again in April.

If you exclude food and energy costs, then you are left with a core inflation, which was really well behaved in April, only rising by 0.1% during the month. Analysts had been expecting to see core inflation growth of 0.2% for the month.

While it is good to see that inflation is not rising as rapidly as some had thought, you have to take into account the current run up in oil prices. With oil trading up close to $127 a barrel, inflation could be getting ready to really jump. Analysts are warning that the current record high oil prices have still not be felt at the consumer level yet, and their impact could be rather dramatic.

Looking at inflation for the year, overall inflation is now running at an annual rate of 3%, compared with the 4.1%  increase that we saw in all of 2007. The Federal Reserve, which has been slashing interest rates lately in an attempt to fight off a recession, has signaled that it would more than likely pause the rate cuts in order to fight off any unwanted inflation in the months to come. The next time the Fed meets will be the third week in June, and dont expect the April numbers to lead them to change their stance and cut rates. I am sure that everyone is still waiting for the other shoe to drop on the recent run up in energy prices.

You can find a pretty nice graph of CPI inflation since 2000 over on economistblog

According to a report from the Commerce Department today, the economy grew at 0.6% during the first quarter of the year. That is the same growth that we saw in the last quarter of 2007. While the news could have been better, it definitely could have been a lot worse. Many analysts were expecting to see growth slow to 0.5%, or even possibly lower.

We have been hearing rumblings for the past year about the looming recession on the horizon, and many thought that this would be the quarter that we saw economic growth fall into negative territory, and now there are already analysts coming out and predicting that the current second quarter will definitely see such an event. Let’s hope they are wrong once more, but the writing is definitely on the wall… but then again it has been for some time now too.

Soaring energy prices, and the continuing credit crunch that has gripped a large part of the country will continue to apply pressue to consumers. Will we get some relief in the months to come? Only time will tell. Currently oil is trading at $114, so prices would still have a long way to fall before we got back into any sort of “cheap oil” environment.

So, it could have been a lot worse. At least we are seeing growth, just really really slow growth. We will see just how today’s report impacts the expected rate cut from the Federal Reserve later today.

Before today’s inventory report, analysts had been expecting to see the Energy Department report that oil inventories had risen by 2.3 million barrles, but the report actually indicated that instead of rising, oil inventories actually fell last week, dropping by 3.14 million barrels.

Gasoline inventories had been expected to decline, but they fell by more than expected which will definitely give reason to believe that today’s record high gasoline average will continue to move higher. Overnight, gasoline prices inched up 1.2 cents to $3.343. We will see how today’s report effects prices overnight tonight.

The market had been pretty flat for most of this morning, in anticipation of today’s report. What we have seen is a drop of oil inventories of 3.2 million barrels, and a decline of gasoline inventories of 3.4 million barrels. What is weighing the most of the market is the gasoline inventories, as the nation is already dealing with record high gasoline prices, that are only predicted to go up even higher as we progress into the heavy demand summer driving months.

While the nation is dealing with the record high gasoline prices, it is expected that for the first time in 20 years, Americans will actually demand less gasoline this summer. This is definitely being viewed as a direct result of just how high prices have hit lately.

For a better illustration of just how strong oil prices have been lately, let’s close by taking a current look at an oil graph:

So what are your thoughts? Are you going to let current gasoline prices impact your summer travel plans? Or will you continue to pay the high prices in order to keep your vacation plans alive?