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Retail gas prices Wednesday hit a new national average record of $3.399 a gallon for regular grade fuel and a record $4.129 for diesel, according to AAA. That's 53 cents a gallon higher than a year ago for regular grade fuel.
In Grand Island, Nebraska AAA reported regular grade fuel was averaging $3.349 per gallon and a new record for diesel was set at $4.025 per gallon. Regular grade fuel in Grand Island is 13 cents away from the all-time record set March 23, 2007, when the average regular grade fuel was $3.481 per gallon.
Statewide, regular grade fuel was $3.360 per gallon and diesel was at $4.027 per gallon.
As gas prices set new records, GOP presidential candidate Sen. John McCain, R-Ariz., is calling for a federal "gas tax holiday" this summer to help motorists.
Sen. Ben Nelson, D-Neb., said McCain hadn't previously mentioned a "gas tax holiday" before becoming the presumptive Republican presidential nominee.
"You can raise questions about his intent here and motivation, but it's a pretty populist position to want to cut taxes," Nelson said. "But he hasn't offered an explanation on where the money is going to come from to continue to provide for federal funding for the roads."
And as gasoline prices continue to climb, a study released recently by Texas A&M's Agricultural and Food Policy Center shows that food prices will continue to rise as well.
The study shows that prices of household groceries, such as bread, eggs and milk, are unrelated to ethanol or the corn price, which has soared to more than $5.50 per bushel.
The study points to higher oil prices as the underlying force impacting consumer prices and agriculture.
"The Texas A&M study dispels the food vs. fuel debate. This study shows there are many forces creating increases in food costs and ethanol is not a major factor," said National Corn Growers Association President Ron Litterer.
He said the analysis examines the potential effect of relaxing the renewable fuel standard on corn prices and finds any action to slacken the standard would not significantly reduce corn prices.
The RFS provision of the 2007 Energy Independence and Security Act requires the use of 36 billion gallons of renewable fuels by 2022, including a 15-billion-gallon allotment for corn-based ethanol by 2015.
"Relaxing the RFS does not result in significantly lower corn prices," the report finds. "This is due to the ethanol infrastructure already in place and the generally positive economics for the industry. The ethanol industry has grown in excess of the RFS, indicating that relaxing the standard would not cause a contraction in the industry."
The analysis found that there are many important economic factors driving agricultural commodity markets and that higher energy costs are the fundamental drivers of changes in the agriculture industry.
"The underlying force driving changes in the agricultural industry, along with the economy as a whole, is overall higher energy costs, evidenced by $100 per barrel oil," the study says.
The authors also found that speculative investment in the commodities futures market is leading to increased volatility.
"Speculative fund activities in futures markets have led to more money in the markets and more volatility," according to the report. "Increased price volatility has encouraged wider trading limits. The end result has been the loss of the ability to use futures markets for price risk management due to the inability to finance margin requirements."
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