Glory
April 19th, 2008, 12:50 AM
Gas prices push closer to $3.50 a gallon, oil hits $117
By John Wilen, Associated Press
NEW YORK — Retail gas prices set records Friday on their seemingly relentless march toward $3.50 a gallon, and diesel prices pushed further above $4 a gallon. Crude futures, meanwhile, surged to a record of $117 a barrel.
The price of crude oil was pushed higher after a militant group in Nigeria said it had sabotaged a major oil pipeline operated by a Royal Dutch Shell joint venture and promised further attacks on the country's petroleum industry.
A spokeswoman for Shell confirmed that the pipeline was leaking, and said the damage appeared to have been caused by explosives. Nigeria is a major supplier of oil to the U.S.
The escalation in crude prices threatened to further boost gasoline costs.
At the pump, the national average price of regular gas rose 2.7 cents overnight to a record $3.445 a gallon, according to a survey of stations by AAA and the Oil Price Information Service. Diesel fuel added 2.2 cents to a record national average of $4.168 a gallon.
The spike in the cost of fuel is hurting consumers already feeling the effects of a slowing economy, a sluggish job market and falling home values. Soaring prices of diesel, which runs most of the world's trucks, trains, ships and heavy equipment, is a major factor pushing food prices higher.
Some analysts expect gas prices to peak near $3.80 a gallon; the Energy Department, in a recent forecast, said prices could average $4 a gallon nationally at times.
"I would say that energy prices are having the most profound effect on the economy in recent memory," said Phil Flynn, an analyst at Alaron Trading, in Chicago, in a research note.
Oil, meanwhile, pushed to records.
Light, sweet crude for May delivery rose to a new trading record of $117 in after-hours electronic trading Friday after settling up $1.83 at a record $116.69 a barrel on the New York Mercantile Exchange. It was the fifth day crude prices set records.
Attacks since early 2006 on Nigerian oil infrastructure by the Movement for the Emancipation of the Niger Delta have cut nearly one-quarter of the country's normal petroleum output, boosting oil prices.
Oil's gains on Friday were limited by the dollar, which strengthened against the euro, sending oil prices lower earlier in the day. A stronger dollar makes commodities such as oil less attractive to investors as a hedge against inflation, and it makes oil more expensive to investors overseas.
Analysts believe the weaker dollar is the primary reason oil has soared well past $100 a barrel this year.
Analysts expect the Federal Reserve to cut interest rates several more times this year — moves that tend to further weaken the dollar — and reason that those cuts will help propel oil to records.
Oil is not the only factor driving gas prices, which are also rising because refiners are switching from producing winter grade gasoline to the more expensive, but less polluting, version of the fuel they're required to sell during summer. When they do that each spring, they tend to draw supplies down to low levels as they try to sell off all their winter fuel.
Short supplies of alkylate, a blending component key to the creation of summer-grade gas, also have pushed prices higher. Contributing to the price spike, refiners have been cutting back on their production of gasoline, which has a low profit margin. Refiners have to buy the crude they process into gasoline, and soft demand for gas has prevented them from boosting pump prices fast enough to keep up with soaring crude futures.
Full article
http://www.usatoday.com/money/industries/energy/2008-04-18-oil-prices_N.htm
By John Wilen, Associated Press
NEW YORK — Retail gas prices set records Friday on their seemingly relentless march toward $3.50 a gallon, and diesel prices pushed further above $4 a gallon. Crude futures, meanwhile, surged to a record of $117 a barrel.
The price of crude oil was pushed higher after a militant group in Nigeria said it had sabotaged a major oil pipeline operated by a Royal Dutch Shell joint venture and promised further attacks on the country's petroleum industry.
A spokeswoman for Shell confirmed that the pipeline was leaking, and said the damage appeared to have been caused by explosives. Nigeria is a major supplier of oil to the U.S.
The escalation in crude prices threatened to further boost gasoline costs.
At the pump, the national average price of regular gas rose 2.7 cents overnight to a record $3.445 a gallon, according to a survey of stations by AAA and the Oil Price Information Service. Diesel fuel added 2.2 cents to a record national average of $4.168 a gallon.
The spike in the cost of fuel is hurting consumers already feeling the effects of a slowing economy, a sluggish job market and falling home values. Soaring prices of diesel, which runs most of the world's trucks, trains, ships and heavy equipment, is a major factor pushing food prices higher.
Some analysts expect gas prices to peak near $3.80 a gallon; the Energy Department, in a recent forecast, said prices could average $4 a gallon nationally at times.
"I would say that energy prices are having the most profound effect on the economy in recent memory," said Phil Flynn, an analyst at Alaron Trading, in Chicago, in a research note.
Oil, meanwhile, pushed to records.
Light, sweet crude for May delivery rose to a new trading record of $117 in after-hours electronic trading Friday after settling up $1.83 at a record $116.69 a barrel on the New York Mercantile Exchange. It was the fifth day crude prices set records.
Attacks since early 2006 on Nigerian oil infrastructure by the Movement for the Emancipation of the Niger Delta have cut nearly one-quarter of the country's normal petroleum output, boosting oil prices.
Oil's gains on Friday were limited by the dollar, which strengthened against the euro, sending oil prices lower earlier in the day. A stronger dollar makes commodities such as oil less attractive to investors as a hedge against inflation, and it makes oil more expensive to investors overseas.
Analysts believe the weaker dollar is the primary reason oil has soared well past $100 a barrel this year.
Analysts expect the Federal Reserve to cut interest rates several more times this year — moves that tend to further weaken the dollar — and reason that those cuts will help propel oil to records.
Oil is not the only factor driving gas prices, which are also rising because refiners are switching from producing winter grade gasoline to the more expensive, but less polluting, version of the fuel they're required to sell during summer. When they do that each spring, they tend to draw supplies down to low levels as they try to sell off all their winter fuel.
Short supplies of alkylate, a blending component key to the creation of summer-grade gas, also have pushed prices higher. Contributing to the price spike, refiners have been cutting back on their production of gasoline, which has a low profit margin. Refiners have to buy the crude they process into gasoline, and soft demand for gas has prevented them from boosting pump prices fast enough to keep up with soaring crude futures.
Full article
http://www.usatoday.com/money/industries/energy/2008-04-18-oil-prices_N.htm