Prices at Pumps Track Record Crude Oil Costs

By Adam Schreck
Associated Press
Tuesday, April 22, 2008

NEW YORK, April 21 -- Rising gasoline prices tightened the squeeze on drivers Monday, jumping to a record average of $3.50 a gallon at filling stations across the country.

Crude oil also set a record, spiking after an attack on a Japanese oil tanker in the Middle East to settle above $117 a barrel for the first time.

"It's killing us," said Jean Beuns, a cab driver in New York who estimated that he is making $125 to $150 a month less than he did in the fall because of fuel prices. "And it was so quick. Every day you see the price go up 5, 6, 10 cents more."

Diesel prices at the pump also struck a record high, at $4.20 a gallon, according to the auto club AAA and the Oil Price Information Service, putting pressure on truckers and other shippers who rely on the fuel to transport goods to market.

Nationally, the average retail gas price jumped more than a nickel over the weekend and is up 23 percent from a year earlier. Drivers are paying the lowest prices in New Jersey and the highest in California, where a gallon of regular averages $3.86.

For drivers, the worst may be ahead, during the summer driving season when demand is highest. The Energy Department has predicted that the monthly average gasoline price will peak at more than $3.60 a gallon in June and could reach $4.

Prices are expected to keep climbing as they trace the path of crude, which has surged to new records for six trading sessions in a row. Oil prices are rising along with a host of commodities, including corn and wheat, gold and platinum, that are enticing speculators seeking hedges against a weakening dollar.

Light, sweet crude for May delivery rose to a record $117.76 a barrel on the New York Mercantile Exchange before settling at $117.48, up 79 cents from Friday's close.

Crude prices came under increased pressure Monday after the 150,000-ton tanker Takayama was struck off the coast of Yemen as it headed for Saudi Arabia, its Japanese operator, Nippon Yusen K.K., said on its Web site. None of the ship's 23 crew members was injured, but several hundred gallons of fuel leaked before a 1-inch hole in the tanker's stern was repaired, the company said.

Kyodo news agency reported that the Japanese tanker was fired on by a rocket launcher from a small boat.

"There's clearly some geopolitical tension in the market," said Mark Pervan, senior commodity strategist at the ANZ Bank in Melbourne, Australia. "This will die down, but the market is pretty jittery at the moment."

Adding to the worries were claims Monday from the most prominent armed opposition group in Nigeria's restive south that it had launched two more attacks on oil pipelines in the region. Attacks since early 2006 on Nigerian oil infrastructure by the group have cut nearly one-quarter of the country's normal petroleum output, boosting oil prices. Nigeria is a major supplier to the United States.

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