Oil Prices Rising To Near 2011 Highs

Oil prices are approaching last year's highs as tensions increase over Iran's nuclear program. The rise pushed gasoline prices on Friday to a national average of $3.65 per gallon, the highest ever for this time of year.

Western nations fear Iran is building a nuclear weapon and have been trying to force it to open its facilities to inspection. Iran has refused, turning away international inspectors this week for the second time this month. The United Nations said Friday that Iran has responded to the recent scrutiny by speeding up production of higher-grade enriched uranium, feeding concerns that it is developing a bomb.

As both sides dig in for a protracted standoff, investors are snapping up oil contracts in case fighting breaks out in the heart of the one of the world's biggest oil-producing regions. "Everyone's pricing in the potential for war now," independent analyst Stephen Schork said. "Without a concrete resolution, nobody knows how high this can go."

Israel hasn't ruled out an attack on Iran, and Iran has said it is ready to strike pre-emptively, possibly targeting the Strait of Hormuz, if it is threatened. The Persian Gulf passageway is a potential choke point for oil supplies. One-fifth of the world's oil tankers pass through it every day.

On Friday benchmark West Texas Intermediate crude rose by $1.94 to end the week at $109.77 per barrel in New York. Brent crude rose by $1.85 to finish at $125.47 per barrel in London.

WTI peaked near $114 a barrel last May, while Brent rose above $126 per barrel.

The price of gasoline, which is made from crude oil, has soared with oil prices. The national average jumped by nearly 12 cents per gallon in a week, with state averages above $4 per gallon in California, Alaska and Hawaii.

It looks like they'll keep climbing.

Tom Kloza, publisher and chief oil analyst at Oil Price Information Service, said pump prices will add at least another 10 to 15 cents per gallon in coming days to reflect a recent jump in wholesale markets.

At $3.65 per gallon, gasoline is still below last year's high of $3.98 and the record $4.11 set in 2008. Kloza says pump prices are on pace to top both of those in coming months. He thinks gasoline will climb as high as $4.25 per gallon by late April.

The rise will weigh on the economy, pushing leisure and business travel costs higher. Every one-cent increase in the price of gasoline costs the economy $1.4 billon, analysts say.

Prices have been surging particularly on the West Coast where a BP refinery was shut down after a fire. That refinery in Blaine, Wash., is the third-largest on the West Coast with a production capacity of 230,000 barrels per day.

The closure comes at a tough time for the refining industry. Most refiners are already slowing production to get ready for a switch over from winter to more expensive summer fuel blends. The seasonal switch usually creates a temporary dip in supplies that pushes prices higher at this time of year. The loss of the BP refinery could make that dip even deeper.

Gasoline has become a major political issue this year as prices tick higher.

Some lawmakers have called on the Obama administration to release more oil from emergency stockpiles in the Strategic Petroleum Reserve, but analysts say that would be ineffective. The government tried that last summer after the Libyan uprising shut down that country's oil fields. Prices dipped slightly but eventually rebounded.

Independent oil analyst Andrew Lipow pointed out that the U.S. has adequate oil supplies right now, and a release of reserves wouldn't make much sense. Traders are mostly concerned with how the Iran situation will affect supplies this summer. Nobody's sure what will happen, Lipow said, and that is pushing investors to buy more oil as an insurance policy against a major conflict.

"It's just unclear how this plays out," Lipow said. "The worry is that Iran will be forced into a position that they try to impact their neighbors in some way" and curtail oil production in the entire region.

In other energy trading, heating oil rose by 2 cents to finish at $3.32 per gallon, while gasoline futures rose by 4 cents to end at $3.15 per gallon. Natural gas prices fell by 7 cents to finish the week at $2.55 per 1,000 cubic feet.

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  • by Anonymous on Feb 27, 2012 at 07:52 PM
    straight from WiKi...After 1980, oil prices began a six-year decline that culminated with a 46 percent price drop in 1986. This was due to reduced demand and over-production that produced a glut on the world market. Around this period, Iraq also increased its oil production to help pay for the Iran-Iraq War. Overall OPEC lost its unity and thus its net oil export revenues fell in the 1980s. After oil prices slumped at around $15 a barrel in the late 1990s, concerted diplomacy, sometimes attributed to Venezuela’s president Hugo Chávez, achieved a coordinated scaling back of oil production beginning in 1998. In 2000, Chávez hosted the first summit of heads of state of OPEC in 25 years. According to US government, in 2011 OPEC will break above the $1 trillion mark earnings for the first time at $1.034 trillion. Who is OPEC ? Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, United Arab Emirates, and Venezuela
  • by Back Location: Gvlle on Feb 27, 2012 at 04:32 AM
    The current president said his policies/regulations WOULD cause energy prices to rise. Well they have risen just as he said they would.
  • by Koch written all over it on Feb 26, 2012 at 07:14 PM
    As oil speculation again hits record highs, leading to record high oil prices, Koch's allies in Congress fight to undermine new reforms and allow unchecked speculation to spiral out of control. Oil speculation is currently at a record level, which experts, and even many Republicans now agree, is causing pain at the pump. After a furious lobbying campaign, the CFTC postpones Dodd-Frank mandated regulations on excessive oil speculation, known as position limits. As the CFTC grapples with how to implement these new rules, newly elected Republicans, many with Koch-backing, propose steep cuts to the CFTC to undercut any rules on oil speculation.
  • by wake-up on Feb 26, 2012 at 07:05 PM
    There has been an endless litany of GOP wharrgarbl lately about how rising gas prices are the fault of President Obama and his environmental policies. According to these professional wharrgarblists, all we need to do is drill more and open the Keystone XL pipeline and prices will magically fall below $2 per gallon. Sounds nice, I know. Problem is: it's utter tripe. U.S. demand for oil and refined products — including gasoline — is down sharply from last year, so much that United States has actually become a net exporter of gasoline, unable to consume all that it makes....Yet oil and gasoline prices are surging.
    • reply
      by Anonymous on Feb 26, 2012 at 07:17 PM in reply to wake-up
      2010: Koch's Tea Party front groups and lobbyists fight financial reforms designed to reign in the unregulated energy market.
      • reply
        by Anonymous on Feb 27, 2012 at 07:33 PM in reply to
        obama's left wing liberal front groups and lobbyists support any regulations designed to restrict the extraction of NATURAL resources in America, ie the lowering of dependance on foreign oil and lowering our prices.
  • by Shine Location: NE NC on Feb 25, 2012 at 11:06 PM
    The BIG 5 oil companies are sitting in a N.Y. Penthouse drinking Scotch and determining mine and your destiny on transportation and fuel. Your auto manufactures have a play in this b/c it will stimulate public to trade for these 'more efficient vehicles' which were around 40 yrs. ago. It just makes the bottom line look better for the econonomist that don't tell the truth about the recession. Figures don't lie, Lier's figure.
  • by Greg Location: Ayden on Feb 25, 2012 at 04:00 PM
    The price of gasoline went from $1.84 per gallon when President Obama took over and is now selling $3.75 per gallon.
  • by Anonymous on Feb 25, 2012 at 03:53 PM
    Barrrack Obama's lack of leadership ability and his energy policy is ruining America.
    • reply
      by Wolfgang on Feb 25, 2012 at 06:48 PM in reply to
      Thank you for the truth. The Month G W Bush left office gas price went to a low or $1.61 per gallon & unemployment was around only 5%. For the truth & facts. Goggle the US Charts. The facts are free online.
      • reply
        by Anonymous on Feb 25, 2012 at 07:33 PM in reply to Wolfgang
        Wolf, the facts don't fit Lavon's or the lefts talking points. All they know is to support obama to keep their free checks coming.... that's mine and your money they are living off of.
      • reply
        by Enough is enough on Feb 26, 2012 at 06:18 PM in reply to Wolfgang
        You Idiot, that was just a snap shot of the economy, now tell us how it was trending towards higher unemployment and higher prices. You Idiots amaze me with your one sided spin on everything. Do you really think people have forgotten how they had to decide on weather to eat or buy gas? Just ask the Auto, Airline, and Trucking industry about that $1.61 a gal BS. They were the ones going into bankruptcy over your so-called $1.61 gal of gas.
        • reply
          by Anonymous on Feb 27, 2012 at 07:36 PM in reply to Enough is enough
          people haven't forgotten...... they are now again choosing to eat or buy gas. Please how in the world can you people still blame this on George Bush ? obama is calling the shots. It's ALL ON obama now. Your food is hauled by diesel rigs... diesel today was $ 4.14/gallon. A truck holds 200-300 gallons of gas and gets about 8 miles/gal on a good day. And you wonder why food prices have gone up ??? Speaking of idiot....
    • reply
      by Anonymous on Feb 27, 2012 at 02:11 AM in reply to
      Drill baby Drill? We all know that was a joke and would have only made more profits for the Oil Companies....not lower gas prices. Face the Facts!
  • by crooks on Feb 25, 2012 at 03:43 PM
    Cantor promises oil speculators Republicans will look out for their interests. http://www.dailykos.com/story/2011/05/18/977185/-Cantor-promises-oil-speculators-Republicans-will-look-out-for-their-nbsp-interests#comments
    • reply
      by Anonymous on Feb 25, 2012 at 05:43 PM in reply to crooks
      Do you actually believe articles from "the daly kos" ?? They are so left wing biased it's crazy. Please learn to open your mind.
      • reply
        by Anonymous on Feb 26, 2012 at 06:13 PM in reply to
        Do you really believe articles from The Blaze?
        • reply
          by Anonymous on Feb 27, 2012 at 07:38 PM in reply to
          what is "the blaze" ?? I've never read it, no. I don't have to read propaganda from either side... common sense tells you obama is a FAILURE ! He has now topped Jimmy Carter, no one thought that was possible.
  • by Anonymous on Feb 25, 2012 at 03:11 PM
    Yeah right. Big Oil Companies and Wall Street have Obama in their back pocket.
  • by Ripped off & PO'd!!!! Location: usa on Feb 25, 2012 at 01:02 PM
    Speculators now control prices for commodities ,NOT supply & demand Speculators comprise 64% of the commodity market i.e. they NEVER intend on taking possession of product,nor produce, transport, etc. What does that mean? $10-15 per barrel more! When Wall Street says oil will go to $4-5 per gallon, they make that a self fulfilling prophecy! The US is now a net EXPORTER of gasoline! Stockpiles have been rising for weeks!Yet they continue to raise prices!! Our representatives in DC allow us to get ripped off, BOTH partys! Speculators drive up the cost of ALL commodities and people starve because of it, yet NOBODY in DC will do anything! Because ALL politicians in DC are bought and paid for! Folks are hollering about the pipeline, but say NOTHING about speculators ripping us off! Don't believe me? Check stockpiles of crude/gasoline weekly report on Bloomberg, etc. The pipeline will NOT lower prices, just bring jobs. CAMPAIGN FINANCE REFORM, ELECT HONEST POLITICIANS, END CORRUPTION NOW!!!!
    • reply
      by Mustang on Feb 25, 2012 at 02:02 PM in reply to Ripped off & PO'd!!!!
      I just wonder how many times the price of a tanker of oil changes before it arrives at the states?
      • reply
        by WOW on Feb 26, 2012 at 04:42 AM in reply to Mustang
        The last I read, the count was approx. 27 times before the oil actually came into the possesion of the eventual consumer. 24 of those owners were banks and hedge funds. RBOB (unleaded gasoline)is even worse, that was something on the order of 34 times. This according to The Wall Street Journal.
    • reply
      by Lubba on Feb 25, 2012 at 03:27 PM in reply to Ripped off & PO'd!!!!
      Yes you are so right, but these party lovers will only pull straight tickets. If you do pull a straight ticket, you are nothing short of an idiot. Every sitting politician should be voted out, stop worrying about what party they are in and realize they are ripping you off. VOTE THEM ALL OUT!!!!!!!!!
    • reply
      by Republicans block Democratic Bill to end Oil Subsidies on Feb 25, 2012 at 03:31 PM in reply to Ripped off & PO'd!!!!
      On the U.S. Senate floor 5/17/2011, Washington Senators Patty Murray and Maria Cantwell both spoke in favor of the bill to end tax breaks for big oil companies. Those loopholes total an estimated $21 billion over 10 years. Gas prices have reached $4 a gallon in much of the country, sparking the Democratic legislation and a senate hearing where Cantwell grilled Exxon’s CEO over the influence of speculation in oil market prices. Republicans BLOCKED the move in the Senate, by preventing the Democrats from reaching 60 votes to consider the legislation.
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