Prices for a gallon of gas Thursday hovered at $4 a gallon or more at many stations, up about 60 cents a gallon from a year ago.

Aurilia McNamara looked like she'd been dropped into the Twilight Zone Thursday as she gassed up her old Mercedes-Benz loaded with three children.

McNamara said her dismayed look was the result of finding gasoline had finally crept over $4 a gallon for regular.

"I don't know where this is going to go," said the 38-year-old Ashland resident. "It's time for everybody to get those electric cars."

The average price in the Medford-Ashland area recorded early Thursday was the highest in the state at a record $3.89 for regular and $4.65 for diesel, according to AAA's Fuel Gauge Report.

Prices Thursday hovered at $4 a gallon or more at many stations. A year ago, the price locally was $3.43 for regular and $2.91 for diesel.

Nationally, the average was $3.83 for regular and $4.59 for diesel.

But $4 a gallon is a psychological barrier Americans have been bracing for as prices continued to climb this year.

"It finally hit that price and nobody likes it," said Vernon Devenport, who works at Ashland Auto Repair, which was selling gas on Lithia Way for $4.16.

He blames the large oil companies for the problem.

"If people like Exxon didn't have to make $10 or $12 billion a month in profits, we would be just fine," said the 60-year-old Medford resident.

Although there are many factors affecting the price of oil and gas, analysts have pointed out that the recent run-up is largely the work of speculators and investors betting on future gains in the price of crude oil and refined gas.

Marie Dodds, spokesperson for AAA, said typically gas prices peak about this time every year, but different market forces are at play this time. She doesn't expect the usual downturn in the near future as oil prices continue to set record levels.

"Investors have played a huge role in running up that price of crude," she said, likening it to the speculative housing market of a few years ago.

When crude oil hit $130 to $135 a barrel, she said that translated into roughly $4 a gallon at the pump.

Emerging markets like India, China and Eastern Europe are also helping to drive up the price per barrel.

Meredith Pech said gas prices in the U.S. are now similar to what they have been in Europe.

"My basic belief is we're just catching up with reality," said the 60-year-old Ashland resident, who had two of her three grandchildren in the car.

Pech said $53.50 was the most she's ever paid to fill up her Subaru wagon. "I used to pay $20," she said.

Lily Hudson said she has two jobs, and paying $50 to fill up is definitely going to put a crimp in trying to save for her education at Southern Oregon University.

Many of her friends have already decided they should just avoid driving altogether. "They sold their cars and they bike everywhere," she said.

Hudson said she plans to cycle more through the summer months to save gas.

Matt Shiltz added just $20 in the tank of his truck. A contractor, he said he has passed on the increased fuel costs to his customers.

"It costs me almost $25 to go to Medford and back," he said.

Marco Alvarez, 40, is just starting a rickshaw service called Ashland Eco-Cab.

He said he offers a green alternative to getting around in Ashland and a way to avoid even higher gas prices.

"It's going to go over $5," said Alvarez, who offers 15-minute rides for $10.

Reach reporter Damian Mann at 776-4476 or dmann@mailtribune.com.