Tags: Oil Prices

Gas Pump Prices Shoot Higher

Friday, 25 Feb 2011 01:48 PM

Oil prices wavered Friday as refineries in Europe prepared for a sustained loss in high-quality Libyan crude. Meanwhile, gasoline pump prices staged their biggest one-day increase since Sept. 2008.

The Libyan rebellion has all but shut down exports from the oil-rich nation, and traders say it's hard to gauge how much world supplies — and prices — will be affected as similar uprisings unfold in North Africa and the Middle East.

"Everyone's a nervous wreck," PFGBest analyst Phil Flynn said. "What we're seeing is perhaps the greatest threat to global oil supply since the Persian Gulf War."

Oil prices soared nearly $20 per barrel in the past week as the Libyan uprising expanded across the country, peaking at $103.41 on Thursday. The effect could be felt at gas stations across the U.S., where pump prices are already the highest ever for this time of year.

A gallon of regular shot up 11.6 cents in the past three days to a national average of $3.29, according to AAA, Wright Express and Oil Price Information Service. That included a spike of nearly 6 cents on Friday, the largest one-day increase since Sept. 14, 2008.

The International Energy Agency and Saudi Arabia have both tried to soothe energy markets in recent days, promising to tap into spare supplies and make up for any sustained production losses out of Libya. Libya produces about 1.6 million barrels per day, less than 2 percent of world consumption, and it exports much of that oil to Europe.

The IEA member nations have about 1.6 billion barrels in reserves. The Saudis produce about 8.5 million barrels per day and could ramp that up to 12 million or more.

European leaders said their oil supplies are currently not in danger, and they are in contact with OPEC officials this week while preparing for a sustained shutdown in Libyan crude.

Italy's economic minister said he didn't expect any supply problems and his country could supplement its supplies through spot oil markets. Italy also has started importing more natural gas from Norway, Algeria and Russia. Libya supplied about 12 percent of Italy's natural gas.

Spain said it would lower highway speed limits, cut train ticket prices to get more riders on board and use more biofuel to offset any shortages from Libya.

Still, analysts are not sure how long spare supplies would last if similar protests disrupt oil production in other parts of the world. They're keeping a close eye on pro-reform rallies in countries like Algeria, which produces about 1.4 million barrels per day, and Bahrain, which has no oil of its own but sits just 15 miles off of Saudi Arabia's eastern coast.

Markets remained on edge Friday. Prices dropped shortly after the U.S. reported the economy grew more slowly at the end of 2010 than previously thought. They jumped again on reports that a magnitude-5.7 earthquake hit Mexico's Gulf coast near numerous offshore oil platforms. A government spokeswoman said oil production was not affected.

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Oil prices wavered Friday as refineries in Europe prepared for a sustained loss in high-quality Libyan crude. Meanwhile, gasoline pump prices staged their biggest one-day increase since Sept. 2008. The Libyan rebellion has all but shut down exports from the oil-rich...
Oil Prices
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2011-48-25
Friday, 25 Feb 2011 01:48 PM
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