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Oil, Gas Prices Again Hit New Records

Posted on: Tuesday, 9 August 2005, 00:00 CDT

Aug. 9--Crude oil and gasoline prices hit new records yesterday, helping ensure that motor fuel prices stay high this summer and underscoring warnings from the federal government about another expensive heating season to come.

Crude oil futures touched $64 in trading yesterday on the New York Mercantile Exchange amid worries of a possible security threat against the U.S. embassy in Saudi Arabia that heightened concern about Middle East supplies.

Futures closed up $1.63 to close at $63.94, an end-of-session record. Meanwhile, the federal government said the U.S. average retail price for regular unleaded gasoline also hit a new record yesterday of $2.37 a gallon as strong demand and mishaps at several refineries are keeping supplies tight.

"Gasoline inventories are on the decline and they have been for several consecutive weeks," said Marshall Steeves, energy analyst at the futures brokerage Refco Inc. in Manhattan.

Gasoline prices locally, meanwhile, remain stubbornly close to records. Regular unleaded averaged $2.538 a gallon on Long Island yesterday, according to a daily survey published by the American Automobile Association, a fraction of a cent below the record set July 18. In the city, a new record average was set yesterday in the survey: $2.611 for regular unleaded.

Analysts think gasoline prices could climb still higher between now and Labor Day weekend, the official end of the summer vacation travel season, after which reduced driving usually results in a decline in prices.

Meanwhile, the U.S. Department of Energy warned last week that heating oil would most likely be more expensive this winter. "With relatively strong demand, inventories could be comparatively tight. ... And crude oil prices are expected to remain at or near all-time highs ... which will affect the price of all petroleum products," it said.

Last winter, home heating oil prices in this region averaged as much as 40 percent above those in the winter of 2003-2004, according to weekly surveys by the state Energy Research and Development Authority.

As of July 18, the authority said, heating oil averaged $2.43 a gallon on Long Island, so that filling a typical homeowner's 275-gallon tank would cost $668.25. In the city, the average was $2.455.

Both averages are higher than on April 11 as the heating season came to an end. About 68 percent of Long Islanders heat with oil. Most city residents heat with natural gas.

Kevin Rooney, executive director of the Oil Heat Institute of Long Island, a trade group, says homeowners fortunate enough to lock in relatively low prices at the start of the last heating season could be in for the biggest shocks in the coming season. "You could be looking at increases of better than $1 a gallon or more," he said.

Further, he said, because prices are so high and unpredictable, many retailers are reluctant to offer caps this year.

At KeySpan Energy, which supplies natural gas on the Island and parts of the city, spokesman Jody Fisher said gas customers also could face higher bills this winter because natural gas prices are rising with those of other fossil fuels.

"We would project an average 5 to 10 percent hike based on current market conditions," he said. But, he added, an especially cold winter could bring further increases.

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Source: Newsday, Melville, N.Y.

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