Oil field shutdown sends crude prices up
NEW YORK -- Crude oil prices jumped more than $2 a barrel yesterday after an Alaskan oil field shutdown, blocking 8 percent of daily US oil production.
Gasoline futures also rose, and experts are expecting prices at the pump to increase by about 10 cents a gallon.
BP Exploration Alaska Inc. began shutting down 400,000 barrels of daily oil production Sunday at Prudhoe Bay, in Alaska's North Slope region, because of severe corrosion on a pipeline.
While BP officials said it will take weeks or months to restore lost production.
About 90 percent of the Alaskan production serves refineries on the West Coast, said Fimat USA analyst John Kilduff, and that region will see the most substantial price increases.
The most recent tally of crude inventories on the West coast was 55.5 million barrels, well above last year's levels. If those stocks become low, though, refiners would need to get additional crude oil shipped from the Gulf Coast, and perhaps Asia. The US government said yesterday it would offer oil from its Strategic Petroleum Reserve, which has about 700 million barrels in storage on the Gulf Coast, if requested.
The average US retail price of a gallon of unleaded, regular gasoline was $3.036 yesterday -- near its record high of $3.057, reached Sept. 5 after Hurricane Katrina hit the Gulf Coast.
``I suspect that record will fall in the next 48 hours," said Tom Kloza, an analyst at Oil Price Information Service in Wall, N.J., on Monday. He noted that pump prices around the country are likely to rise 5 to 10 cents a gallon.
In March, a BP transit line in the North Slope spilled 267,000 gallons of oil. It was a month before BP was able to install a bypass on that line to resume operations. BP is under criminal investigation for that spill. 