The rise in gas prices in this area is nothing short of a rip off..when the major metro areas have lower prices than we do, the scam is in.
Oil Crosses $100 for 1st Time Since April 2
By MADLEN READ
,
AP
posted: 4 HOURS 41 MINUTES AGO
NEW YORK (Sept. 12) - Crude oil futures briefly sank below the psychologically important $100-a-barrel mark for the first time in five months Friday, showing that investors believe a worsening global economy will continue to drive down demand for some time in the U.S. and elsewhere.
Gasoline prices, however, jumped at the wholesale level as Hurricane Ike swept through Gulf of Mexico, prompting companies along the Texas coast to shut down refining and drilling operations.
On the New York Mercantile Exchange, light, sweet crude for October delivery fell 6 cents to settle at $100.18 a barrel in afternoon trading, after briefly sinking to $99.99. In London, October Brent crude fell 6 cents to settle at $97.58 a barrel on the ICE Futures exchange, after closing at a six-month low in the previous trading session.
October gasoline futures climbed 0.11 cent to $2.76 a gallon on Nymex.
The fact that U.S. fuel demand is so weak right now might mean the recent surge in the wholesale price of gasoline - which rose to about $4.85 a gallon in the Gulf Coast market Friday - might not be passed along to consumers unless Ike's impact is severe and long-lasting.
"Major oil companies are sensitive to raising prices in this environment," said Ben Brockwell, director of data pricing and information services at the Oil Price Information Service.
Ike is forecast to land early Saturday as a Category 3 hurricane near Galveston, a barrier island about 50 miles (80 kilometers) southeast of Houston. The Houston region is home to about one-fifth of U.S. refining capacity, and the site of a major fuel and grain distribution channel.
Wholesale gasoline prices on the Gulf Coast moved further into uncharted territory Friday, as refineries anticipated that Ike would lead to at least a significant pause in their operations, and at worst damage to their facilities. On Thursday, the Gulf Coast wholesale price of gasoline last traded at around $4.75 a gallon, according to OPIS, up substantially from about $3.25 Wednesday and less than $3 Tuesday.
Wholesale prices were much lower in other regions such as Chicago, New York and Los Angeles, but even those areas saw prices rise.
"Hopefully it's a temporary phenomenon, but we won't know until next week," Brockwell said.
Wholesale prices are determined by major players in the supply chain including refining and trading companies, which constantly buy and sell barrels. These prices end up deciding what refineries charge distributors, before they get marked up further at the retail level for the consumer.
The average U.S. retail price for gasoline edged up less than a penny to $3.675 Friday from Thursday, according to auto club AAA, OPIS and Wright Express.
Exxon Mobil Corp., Valero Energy Corp., ConocoPhillips and Marathon Oil Co. have begun halting operations as the Category 2 hurricane headed straight for the nation's biggest complex of refineries and petrochemical plants. U.S. wholesale gasoline prices spiked 30 percent Thursday.
As of Friday, nearly 98 percent of crude production and more than 94 percent of natural gas production in the Gulf were shuttered, according to the Department of the Interior's Minerals Management Service.
By Friday afternoon, Ike was a Category 2 storm centered about 165 miles (265 kilometers) southeast of Galveston, moving to the west-northwest at nearly 12 mph (19 mph). Forecasters warned it could become a Category 3 storm with winds of at least 111 mph (180 kph) before the eye strikes land.
Ike is huge, taking up nearly 40 percent of the Gulf of Mexico. The National Hurricane Center said tropical storm-force winds of at least 39 mph (62 kph) extended across more than 510 miles (820 kilometers).
Ike and last week's Hurricane Gustav have helped to stanch a sharp downturn in oil prices. Concerns over slowing economic growth on a global scale and a strengthening U.S. dollar have led funds to liquidate their commodities holdings, pushing crude prices down about 30 percent from their record $147.27 set on July 11.
U.S. fuel demand in June was down 5.6 percent from the same period a year ago, according to a recent report from the Energy Department, so many market watchers are expecting oil prices to resume their tumble.
"With demand being down as much as it is, the market, some argue, is a bit oversupplied," said Stephen Maloney, a senior consultant in energy risk management at Towers Perrin. "When you ask, how does Ike affect things? Its impacts are going to be in the context of lower demand for products than a year ago."
In other Nymex trading, October heating oil futures rose 1.45 cents to settle at $2.93 a gallon. Natural gas for October delivery rose 7.37 cents to settle at $7.372 per 1,000 cubic feet.
Associated Press writers Alex Kennedy in Singapore and Louise Watt in London contributed to this report.
Copyright 2008 The Associated Press
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