NEW YORK – Typically, drops in demand mitigate rising prices, but that’s not happening at the pump, reports The Wall Street Journal.

Despite a 12 week run of a decrease in demand, the longest period of lower demand since the U.S. Energy Information Administration (EIA) has been tracking demand, prices are now at record highs.

Also, after EIA reported a sharp decline in crude inventories on Wednesday, crude oil prices surged more than $2 to settle at $110.87 on Nymex. Futures retreated slightly on Thursday, settling at $110.11.

Rising oil prices have hurt refining margins thus far in 2008, reports the Journal, leading to overall cutbacks in refining production.

“With oil prices at those levels, refiners just can’t afford to stock crude and are cutting back on their inventory positions as deeply as they can,” Antoine Halff, an analyst at Newedge, told the newspaper.

And consumers are also decreasing their demand at the pump, NACS spokesperson Jeff Lenard told the Journal. While many NACS members report flat fuels sales, Lenard noted that sales of many in-store items, such as food, drinks and other products, have increased.

The group’s members report gasoline sales are mostly flat on the year, while sales of food, drinks and other products they sell inside their stores have increased. This suggests consumers are bundling shopping trips with trips to the gas station to save on gasoline, he said.