Tuesday, July 17, 2007

Oil price over $78 nudges record high/Chicago gas nation's costliest - $3.46 a gallon price compares to low of $2.80 in Arizona

Oil price over $78 nudges record high
By Javier Blas in London
Copyright The Financial Times Limited 2007
Published: July 17 2007 03:00 | Last updated: July 17 2007 03:00

The oil price yesterday skirted record highs above $78 a barrel, prompting policymakers to warn about the inflationary impact of rising energy costs.

Brent crude oil, seen as the best gauge of the global oil market, rose to an intra-day high of $78.40 a barrel, just below last August's all-time high of $78.65.

Profit-taking later pushed Brent crude back down to $77.32 a barrel.

Crude prices have risenby 51 per cent since hitting a year low in January.

Goldman Sachs, the US investment bank, yesterday warned prices could surge to $95 a barrel within six months without increased production from the Organisation of the Petroleum Exporting Countries.

"Total crude oil supply is 1m barrels a day lower than last summer while demand is 1m b/d higher," the bank said in a report.

Opec yesterday again rejected calls to increase its supply, stating in its monthly report that the crude oil market was "healthy". The cartel, which controls about 40 per cent of global oil production, has so far rejected calls for a supply boost after having twice cut its output last year. It blames refinery bottlenecks for the current rise in oil prices.

Analysts suggested further crude price rises were likely after new US figures showed levels of speculative money betting on rising prices last week reached a record high.

However, some traders warned that before any movement higher the market was vulnerable to a correction in the short term, especially if the forecast of an active hurricane season proved overstated.

Rising energy costs have prompted policymakers to warn about a possible inflationary impact, just days after the International Energy Agency, the industrialised countries' energy watchdog, reiterated its call on Opec to increase its production.

Chicago gas nation's costliest - $3.46 a gallon price compares to low of $2.80 in Arizona
By Robert Manor
Copyright © 2007, Chicago Tribune
Published July 17, 2007

Chicago again has the highest gasoline prices in the nation.

The average cost of a gallon of regular gas in the city is now $3.46, according to oil industry analyst Trilby Lundberg, whose survey shows that the lowest price in Tucson, Ariz., at $2.80. The national average is $3.05 a gallon.

U.S. gas prices on average rose about 6 cents in the last three weeks, according to the survey.

Prices declined slightly as wholesale inventories have been high in recent days. Gas prices at the pump typically lag wholesale price movements down.

The five most expensive states were, in order: Nebraska, Michigan, Illinois, Wisconsin and Hawaii, according to another survey conducted by the American Automobile Association.

The auto club published a slightly lower number for Chicago, saying its survey showed regular gasoline sold in the city was going for $3.424 a gallon.

While high by historical standards, that remains below the record $3.66 set in May.

Several factors are working to push up gasoline prices.

Illinois auto club spokeswoman Nicole Niemi said that recent flooding in Kansas halted operations at a refinery there. The country's refining capacity is already stretched to the limit.

And demand for gasoline remains strong.

"Driving is up across the board," Niemi said.

She said that on Memorial Day 32.1 million people took auto trips of 50 miles or more. On July 4, an estimated 34.7 million people hit the road.

Both were records, Niemi said.

High oil prices are also contributing to more expensive gasoline.

The benchmark price of crude was trading above $74 Monday, an 11-month high.

Chicago is often among the most expensive cities for gasoline because of high local taxes and other factors.




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