Prices at wellhead, pump out of sync
The decline in retail gasoline prices continued in California and the nation over the last week, a federal report showed Monday. But the good news for motorists was tempered as crude oil futures shot past $69 a barrel because of international labor strife and violence in Nigeria and the Middle East.
In Nigeria, an important source of light sweet crude for U.S. refineries, hundreds of villagers chased workers away from a Niger Delta oil transfer facility run by Chevron on Monday. The incident came just one day after anti-government rebels took over a separate oil flow station and allegedly held workers and some Nigerian soldiers captive.
In addition, oil workers in Nigeria and in Brazil were planning to conduct strikes as early as this week. Brazil is a big producer of ethanol and holds the second-largest oil reserves in South America behind Venezuela.
The labor news combined with continuing unrest in the Middle East to drive the price of crude oil to its highest level in nine months. Crude for July delivery finished the day up $1.09 to $69.09 a barrel in New York futures markets trading.
“There had been some hope after the recent Nigerian presidential election and the more recent release of a very important rebel leader that there would be fewer attacks, but so far that hasn’t happened,” said Phil Flynn, vice president and senior market analyst for Alaron Trading Corp. in Chicago. “There doesn’t appear to be anywhere internationally where we are getting a break on news that affects oil.”
For the moment, at least, the cost of gasoline hasn’t been affected by the oil news. That was in spite of the fact that the nation’s gasoline supplies remained tight at 201.5 million barrels as of June 8, 11.6 million barrels below the level a year earlier.
The average price of a gallon of self-serve regular in California dropped 8.4 cents further to $3.236, according to the Energy Department’s weekly survey of filling stations around the U.S. That was just 3.8 cents above the year-earlier average.
Nationally, the average fell 6.7 cents to $3.009 a gallon. Gasoline prices began falling four weeks ago, and the average is now 13.8 cents above the same week in 2006. The biggest drop was in the Midwest, where the average fell 8.9 cents to $2.984.
“The prices right now are still a little too high and they will continue to drift lower. People are still annoyed and demand for gasoline is not as robust as the Energy Department suggests,” said Tom Kloza, chief oil analyst for the Oil Price Information Service in New Jersey.
