Gas prices hit record high

Monday, April 21st 2008, 8:29 am
By: News 9

Staff and Wire Reports

Gasoline prices in Oklahoma City reached at an all-time high Monday as attacks on oil tankers halfway across the world were carried out. 

According to the American Automobile Association of Oklahoma, the price of gas reached an average of $3.38 Monday morning for regular-grade fuel in the metro-area, eclipsing the old record of $3.29 set nearly a year ago. Six months ago, the average price of regular-grade gasoline in the metro was $2.70.

Oil Price Information Service chief oil analyst Tom Kloza says gasoline prices could top out in Oklahoma at about $3.50 per gallon.

Despite hitting a new high, Oklahoma still has some of the lowest fuel prices in the country. Only four states have lower prices. 

The swing in gasoline prices is being largely driven by the price of crude oil, which continued a record-setting streak yesterday. The price of crude closed at $116.69 per barrel for the first time on the New York Mercantile Exchange.

Crude prices make up 72 percent of the price paid at the pump and have set records for five consecutive days.

Oil prices spiked to a record $117.40 a barrel after a Japanese oil tanker was hit by a rocket near Yemen and militants in Nigeria claimed two attacks on pipelines.

None of the ship's 23 crew members was injured. Hundreds of 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.

Light, sweet crude for May delivery reached $117.40 a barrel, but fell back to $116.88 by midday in Europe, up 19 cents from Friday's closing price.

In London, Brent crude futures for June rose 21 cents to $114.13 a barrel on the ICE Futures exchange.

"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 main militant group in Nigeria's restive south that it had launched two more attacks on oil pipelines in the region. There was no immediate confirmation.

Last Friday, oil prices rose to touch $117 for the first time after an attack on a Royal Dutch Shell PLC pipeline by the Movement for the Emancipation of the Niger Delta.

Shell confirmed a pipeline leak that it said appeared to have been caused by explosives. It said it had isolated the line for repairs and that a small quantity of production had been shut.

Attacks since early 2006 on Nigerian oil infrastructure by the militant group have cut nearly one-quarter of the country's normal petroleum output. Nigeria is a major supplier of oil to the U.S.

Pervan said incidents such as the pipeline and tanker attacks were "one-off" issues that didn't really change the market. "They're not fundamental, they're not going to be sustainable," he said.

Comments over the weekend by an OPEC official that the group isn't likely to increase production also supported prices on Monday.

Abdullah el al-Badri, secretary-general of the Organization of Petroleum Exporting Countries, said Sunday that oil prices would likely go higher and that the group was ready to raise production if the price pressure was due to a shortage of supply -- something he doubted.

"Oil prices, there is a common understanding that has nothing to do with supply and demand," al-Badri said on the sidelines of an energy conference in Rome.

Also over the weekend, Iranian President Mahmoud Ahmadinejad was quoted Saturday as saying crude oil prices at $115 a barrel are too low, and that oil must "discover its real value."

Ahmadinejad made the remarks during a visit to an oil and gas exhibition in Tehran late Friday.

In other Nymex trading, heating oil futures rose 2.87 cents to $3.210 a gallon while gasoline prices rose 0.07 cents to $2.99 a gallon. Natural gas futures rose 9.7 cents to $10.684 per 1,000 cubic feet.