Crude oil price reaches new high

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Friday, February 29, 2008

An oil refinery

Crude oil prices in New York rose to a new record of US$102.59 per barrel on Thursday, although the figure increased even more during after hours trading. In less than a month, prices have risen $10, leading the inflation adjusted prices above the record highs set during the 1980s. Information provided by the International Energy Agency has said that the previous record was $102.53, with the figures being adjusted according to inflation levels.

While the weak dollar is seen as a major cause of this rise, Congressman Ron Paul of Texas, pointed out to Federal Reserve chairman Ben Bernanke in a committee meeting this week that despite the rapid ascent the of price of oil, it had remained flat when compared to the price of gold.

A graph showing recent increases in gasoline prices

Increasing demand for oil has also been cited as the cause for this increase. Violence in Nigeria earlier this year has led to a drop the country's production by almost a quarter. The most recent information produced by the Energy Information Administration has shown an increase in gasoline prices for all but one of the areas surveyed.

There have also been suggestions that reports of a fire at a National Gas Terminal may have contributed to the rising oil price. Tim Evans from Citigroup Futures said he believes "that this fire at the UK natural gas terminal is creating a strong push in the European market, and that is translating here [the US]."