Oil And Gas Prices Hit New Milestones - KFDA - NewsChannel 10 / Amarillo News, Weather, Sports

Oil And Gas Prices Hit New Milestones

(CBS/AP) Retail gas prices reached another new milestone Monday, jumping to an average $3.50 a gallon at filling stations across the country. Crude oil prices, meanwhile, kept setting records of their own, spiking to a record above $117 a barrel Monday after a Japanese oil tanker was attacked in the Middle East.

Diesel prices at the pump also struck a record high of $4.20 a gallon, according to AAA and the Oil Price Information Service.

Gas and diesel are expected to keep climing - gas because of the rise in oil and because the summer driving season, when demand is at its greatest, has yet to begin. And diesel, in demand throughout the world because it is used to haul goods of all kinds, shows no signs of halting its own advance.

"I'm not happy but you know I have to drive to work, I have to get around, there's nothing I can really do about it," a driver in Pittsburgh told CBS Radio News. "I don't have a job where I can take the bus everyday."

The attack on the 150,000-ton tanker Takayama came about 270 miles off the Yemen coast in the Gulf of Aden while it was heading for Saudi Arabia, its Japanese operator, Nippon Yusen K.K., said in a statement posted on its Web site.

None of the ship's 23 crew members was injured, but several 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 on the New York Mercantile Exchange rose to a record $117.40 a barrel but fell back to $116.63, down 6 cents from Friday's close. Oil prices had touched $117 on Friday before slipping.

"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.

On 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, boosting oil prices. 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.

Abdalla Salem el-Badri, secretary-general of the Organization of Petroleum Exporting Countries (pictured at left), 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," el-Badri said on the sidelines of an energy conference in Rome.

Also over the weekend, Iran's hard-line 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."

The Iranian president 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.

In London, Brent crude futures for June were up 13 cents to $114.50 a barrel on the ICE Futures exchange.


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