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Crude Oil Soars Above $75 a Barrel

Retail gasoline prices also continue to climb nationwide on supply fears. Politicians and consumer groups call for investigations.

April 22, 2006|From Times Staff and Wire Reports

Crude-oil prices broke through $75 a barrel to hit another record Friday on concerns about Iran's nuclear ambitions and tight U.S. gasoline supplies.

Retail gasoline prices also kept rising, with the average price of a gallon of self-serve regular-grade gasoline at $2.855, up 3 cents from a day earlier and more than 60 cents higher than a year ago, AAA said. California's average, at $3.053 a gallon, was a tenth of a penny away from the record set in September in the aftermath of hurricanes Katrina and Rita.

Politicians and consumer groups called for investigations into the rapid fuel-cost increases as spot shortages developed on the East Coast.

Analysts say oil prices are likely to climb even higher as worries grow about how international pressure on Iran and rebel fighting in Nigeria will affect oil supplies.

"You put all these headlines together, you see the situation is getting charged up and getting out of control. That's why oil traders and speculators are having a field day," said Oppenheimer & Co. oil analyst Fadel Gheit.

Light, sweet crude for June delivery rose $1.48 to close at $75.17 a barrel on the New York Mercantile Exchange after peaking at an all-time trading high of $75.35. The May contract had settled at $71.95 on Thursday, the day it expired.

Traders worry that U.S. gasoline supplies may not meet summer demand after seven straight weeks of drops in domestic gasoline stocks, now at their lowest level since November.

U.S. refineries are performing seasonal maintenance on a greater scale this year because of hurricane damage. Also, the industry's abrupt shift to the gasoline additive ethanol from methyl tertiary butyl ether, or MTBE, which was found to be a groundwater pollutant, is creating supply problems.

Energy Secretary Samuel Bodman said Friday that phasing out MTBE could be complicated and that there was no simple solution to lowering oil prices.

The surge in gas prices added to the political anxiety in Washington, where congressional Republicans and White House staff met to discuss strategies to demonstrate their concern.

House Speaker J. Dennis Hastert (R-Ill.) and Majority Leader Bill Frist (R-Tenn.) plan to send a letter to President Bush on Monday calling for an investigation into whether there has been price gouging and market speculation. A House committee is expected to launch a separate probe into why some energy facilities damaged by Hurricane Katrina have yet to be brought back on line and how oil companies invest their profits.

Congressional Republicans also are considering calling oil industry executives back to Capitol Hill to grill them again on what they are doing to increase fuel supplies.

The effort comes as Democrats have sought to spotlight high energy prices on the campaign trail, including assailing Republican candidates for accepting campaign contributions from the oil industry.


Times staff writers Richard E. Simon in Washington and Ronald D. White in Los Angeles contributed to this report, and the Associated Press was used in compiling it.

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