Unrest drives gas prices up further

Mass. remains below US average

Associated Press / March 1, 2011

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Massachusetts gas prices, fueled by social unrest in the Middle East and North Africa, soared 17 cents in the past week but still remained well below the national average.

AAA Southern New England reported yesterday that a gallon of self-serve, regular jumped to an average of $3.30, seven cents below the national average.

Gas has risen in Massachusetts 24 cents per gallon since the beginning of the year, and self-serve regular is now 66 cents more than at the same time last year.

Nationally, gasoline prices shot up nearly 20 cents per gallon in the past week. A gallon of regular cost an average of $3.37 yesterday.

Meanwhile, oil prices fell below $97 per barrel yesterday just days after spiking above $100.

Crude dropped on reports that Libya was still exporting oil. Shipments were thought to have halted last week as protestors clashed with the government and Libya’s leader, Moammar Khadafy, lost control of many of the country’s oil fields. But industry officials said yesterday that a tanker bound for China was loading oil in the Libyan port of Tobruk. Saudi Arabia also was boosting exports.

Benchmark West Texas Intermediate crude for April delivery lost 91 cents to settle at $96.97 per barrel on the New York Mercantile Exchange. In London, Brent crude fell 34 cents to settle at $111.80 per barrel on the ICE Futures exchange.

Traders said there is a “fear premium’’ of $15 to $20 per barrel built into the price of oil to account for further disruptions in shipments as protest movements sweep through North Africa and the Middle East. Oil prices should slide as the situation in Libya stabilizes, analysts said.

But energy markets are so rattled right now that continued unrest in other major oil producers, including Algeria and Oman, could keep prices extremely volatile this week.

“The market is going to be on a hair trigger,’’ PFGBest analyst Phil Flynn said. “If something else happens, get ready for prices to shoot back up.’’

The Arabian Gulf Oil Co., based in Benghazi, told the Associated Press yesterday that its Tobruk terminal is open for business and at least two of the country’s major eastern fields, Sarir and Misla, were still producing.

Despite the chaos, Arabian Gulf has not been forced to cut its daily production of 220,000 barrels, company officials said.

Libya produces about 1.6 million barrels of oil per day, most of it bound for Europe.

Michael Lynch, president of Strategic Energy & Economic Research, expects oil prices to continue to fall this week as rebels strengthen their hold over Libya. Still, further unrest in the region will hold prices artificially high for months to come, making diesel and gasoline more expensive as the world’s major economies continue to work their way out of recession.

With oil prices so high, “this is not going to be a robust year for the economy,’’ Lynch predicted.

A Bank of America analyst, Francisco Blanch, said the Libyan revolt created a massive disruption in world oil supplies that will put a heavy burden on Saudi Arabia and other countries with spare inventories.