Crude oil prices hitting new record
Crude oil futures – the price bid by producers – hit an all-time high Thursday of $45.50 per 42 gallon barrel. Should Americans therefore brace for sticker shock at the pump in about 60 days?Not necessarily, say fuel experts. “Crude oil is trading on world events and gas prices are trading on domestic events,” said Bryant Gimlin of Gray Oil, a Denver-based petroleum wholesaler. “The demand supply fundamentals have improved a lot in the last few weeks. Product prices have been reluctant to follow crude oil prices higher.”
Those world events involve several countries that supply crude to the U.S., including: The shutdown and reopening of the Russian oil giant Yukos after its founder was tried on corruption charges; shutdown of Iraqi oil pipelines; the potential for recall of the Venezuelan president and possible disruptive economic effects that could create; and unrest in Nigeria threatening that country’s oil supply. If they all result in an interrupted supply of crude, prices around the oil-hungry globe may again spike.Colorado’s average price for a gallon of unleaded gasoline is hovering above $1.92, or about 10 cents a gallon less than its peak price. In Vail the average price per gallon of unleaded has been above $2.17.”There’s at least a $10 premium in futures because of the speculative fear,” said Mary Greer, spokeswoman for Colorado AAA, an automotive group. She said gas supplies have increased, causing prices to drop.
“We should see a 30 percent drop in demand after the summer driving season,” she said. Greer said a recall of Venezuelan President Hugo Chavez and possible interruptions of that supply could have the quickest effect on this country.”Venezuela supplies 15 percent of our gas,” she said. “It’s only seven days to market for Venezuela. OPEC nations take 30 days.”With demand waning, refineries now are beginning to convert from producing gasoline and diesel to creating fuel oil for the coming winter, Greer said.
But the volatility of oil prices will continue because demand is peaking as countries along the Pacific Rim – like China – continue to industrialize and compete for energy.Gimlin said he thinks the threat to oil supplies is already built into today’s prices. The price will be more likely to spike if producers are unable to meet demand, he said. Staff Writer Cliff Thompson can be reached at 949-0555, ext. 450, or firstname.lastname@example.org vail colorado