Prices for crude oil and wholesale gasoline surged yesterday, extending a recent run-up and leading analysts to predict steep increases at the pump in coming weeks.
A combination of high worldwide oil demand, cold weather and fears of tight supplies has helped push prices higher in the past two weeks. Oil traders also cited an influx of speculators moving their money from the stock and bond markets into oil.
_____Multimedia_____
•
Video: Just in time for summer travel, oil prices are reaching skyward. If the cost of gasoline goes along it will follow a trend that has pushed the price up almost a quarter in the past month alone.
|
| |
|
On the New York Mercantile Exchange yesterday, U.S. benchmark crude oil for April delivery hit more than $55 a barrel before receding to close at $53.57, up 52 cents from Wednesday. Traders pushed the wholesale price of gasoline to a record high on Wednesday and again yesterday.
The increases will quickly be passed along to consumers at gas stations, analysts said.
"It is coming," said Tom Kloza, chief analyst for the Oil Price Information Service of Lakewood, N.J. "It's not going to be like raindrops. It's going to be like an anvil falling on the consumer in the next 40 days."
Kloza said he expected prices for a gallon of regular gasoline to increase nationally from yesterday's average of about $1.92 to between $2.10 and $2.25 by later next month. Prices could go even higher, he said, depending on whether crude oil price increases continue.
Analysts attributed the recent rise in crude prices partly to higher-than-expected demand from China and other countries. Cold weather also has caused prices to rise as consumers use more home heating oil. In addition, oil traders fear that a supply disruption could cause shortages because the world has little ability to pump additional oil from the ground.
The Organization of the Petroleum Exporting Countries also has played a role in pushing up prices in recent months. The cartel in December agreed to cut some production as oil traded in the $40 a barrel range. Analysts said OPEC followed through with some of those cuts, taking oil off the market. The cartel is scheduled to meet on March 16 and could set new production levels.
U.S. Energy Secretary Samuel W. Bodman told reporters yesterday that the Bush administration was in contact with OPEC members in an effort to hold down prices. "We believe it is in their interest to, at a minimum, maintain current supplies," Bodman said.
Rising oil prices have not helped OPEC members as much as in previous months. Oil is traded in dollars, whose value has been declining against the euro. That restrains the buying power of OPEC countries that import European goods. Analysts said that development makes OPEC more likely to seek higher prices for its oil.
In October, prices reached a record of more than $55 a barrel before dropping to around $40 a barrel in December. Since the beginning of 2005, prices are up more than 27 percent. Adjusted for inflation, prices have remained well below the peak reached in 1981.
Analysts expressed mixed opinions about whether oil prices would continue to increase. A further rise will depend in part on whether OPEC cuts production and its members have sent mixed signals.
Even though stockpiles of oil and gasoline on the market are within normal ranges, the market is fearful of shortages in coming months, traders said.
"The fear is there won't be enough," said Michael Rose, head of the trading desk at Angus Jackson Inc., a futures trading firm in Fort Lauderdale, Fla. "Whenever you add fear into the mix, things can go berserk."
On Capitol Hill yesterday, several Republican lawmakers and Bush administration officials seized on the increase in oil prices as reason for lawmakers to approve drilling in Alaska's Arctic National Wildlife Refuge. Proponents argue that doing so would moderate prices and make the United States slightly less dependent on foreign oil, while opponents fear drilling would despoil an environmentally sensitive area.
The chairman of the Senate Energy and Natural Resources Committee, Pete V. Domenici (R-N.M.), hosted a news conference with several of his colleagues, Bodman and Interior Secretary Gale A. Norton to announce that they are traveling to the wildlife refuge on a fact-finding mission. Domenici and others said that advances in drilling technology would minimize the environmental impact.
