Consumers pay price for higher oil
April 3, 2002 Posted: 6:26 AM EST
LONDON, England (CNN) - Oil prices slipped back from six-month highs on Wednesday after a surprising jump in U.S. crude inventories overshadowed fears that the Middle East conflict could hamper exports from the region.
But despite a temporary drop in the cost of crude, the impact of rising wholesale prices since September has already spilled over at petrol pumps.
In London, crude for May delivery was down 81 cents to $26.85 a barrel in early trading London on Wednesday. In New York, May crude fell 33 cents to $27.38. The declines followed a report that crude stockpiles in the U.S. rose more than expected last week.
However, with crude expected to regain its upward momentum as Mideast tensions continue -- and with the traditional summer rush to the pumps about to begin -- there appears to be little let-up for consumers.
In the United States, gas prices have been rising for four straight weeks, according to the Energy Information Administration. The hardest hit cities have been San Francisco and Los Angeles.
"U.S. refiners are beginning to look towards the summer," Julian Lee, an analyst at the Centre for Global Energy Studies, told CNN.
"They are looking towards rising demand for gasoline. And they are now beginning to search around for crude oil that simply isn't there because OPEC has taken it off the market."
In Europe, German consumers are seeing gas prices as their highest levels in seven months. In Sweden, the cost of petrol has been rising almost on a weekly basis. And in the UK, many drivers having paying higher petrol prices since mid-March.
Companies like BP, ChevronTexaco, Shell and TotalFinaElf have said the full impact of the rise in crude prices has yet to feed through to British petrol pumps.
However, many European retailers say their profits are razor thin. If crude was to hit the $30 a barrel level -- which many analysts are predicting -- consumers can expect to pay even more in coming months.
Oil prices have jumped more than 50 percent since mid-January as the U.S. economic rebound has stoked demand.
At the same time, the Organisation of the Petroleum Exporting Countries has held back supplies while markets have worried about possible military action against Iraq.
On Tuesday, Iraq's acting Foreign Minister Human Abdul-Khaleq Abdul-Ghafur said Baghdad was ready to cut off oil supplies to the U.S. if Iran did the same.
In the 1970s, Arab nations imposed an oil embargo on Western countries that helped trigger a worldwide recession.
Saudi Arabia and other major OPEC producers have said they have no intention of repeating the oil embargo. Some analysts say an embargo would not have the same impact now as it did in the 1970s.
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