"Isaac" pushes up oil prices

CBS/istockphoto.com

(AP) BANGKOK - Oil prices rose Monday as Tropical Storm Isaac barreled across the Gulf of Mexico and toward the U.S. mainland, picking up strength and threatening oil and refining operations. An explosion at a refinery in Venezuela also pushed prices higher.

Benchmark crude for October delivery rose $1.03 in late afternoon Bangkok time to $97.18 per barrel in electronic trading on the New York Mercantile Exchange. The contract fell 12 cents to finish at $96.15 per barrel on the Nymex on Friday.

Brent crude rose $1.21 to $114.80 on the ICE Futures exchange in London.

Oil analyst Stephen Schork said in an email commentary that he expects "much higher volatility this week" due to Tropical Storm Isaac, which weather forecasters said would pick up strength before striking as a Category 2 hurricane somewhere between New Orleans and the Florida Panhandle on Wednesday.

Schork worries that the storm will be a repeat of Hurricanes Katrina in 2005 and Gustav in 208, damaging Gulf refineries and pipelines and disrupting oil tanker traffic.

Another factor pushing up prices was an explosion and fire that shut down operations at the Amuay refinery in western Venezuela, said Victor Shum, energy analyst at consultancy Purvin & Gertz in Singapore.

Amuay is among the world's largest refineries and is part of the Paraguana Refinery Complex, which also includes the adjacent Cardon refinery. Together, the refineries process about 900,000 barrels of crude per day and 200,000 barrels of gasoline.

Gasoline futures rose nearly 10 cents to $3.008 per gallon. Heating oil rose 5 cents to $3.1727 per gllon. Natural gas rose 4 cents to $2.743 per 1,000 cubic feet.

[credibility2]

...more excuses to fuel higher gas prices...paid $4.079 yesterday for regular unleaded in a suburb of Chicago...

[Nikos_Retsos]

I don't really think that Isaak or the Venezuela explosion has anything to do with oil prices shooting up. Oil is a speculative business, and the companies and their distributors jack up the prices immediately when an event happen - even though the event has not affected the oil still in storage or in the pipelines. A few years back, the Illinois Attorney General fined about 300 distributors in the state $ 1000 each for raising prices at the pump when a headline appeared in the papers about an accident at a processing plant in the Illinois-Indian borders. All distributors paid. Nobody dared to challenge the fine in court - as they could- because it was clearly fraudulent!

Unfortunately, the same happens across the nation. Recently, the Enbridge Pipeline broke in Michigan and spilled 20.082 barrels of oil into the Kalamazoo River (The Chicago Tribune, August 26, 2012). That trivial spill also contributed to the higher oil prices - according to sources. Why should 20.000 barrels affect the "supply and demand" price in a nation where billions of barrels are consumed daily? Well, actually they don't. But the news bulletin serves as a "green flag" for oil companies and distributors to jack up the prices.

Oil accidents are pure profiteering, and it is the essence of capitalism that Mitt Romney brags about. The oil companies are not in business to make the lives of the drivers easy; they are in business to fry them at the pump! Nikos Retsos, retired professor

[dwreck2you]

wow another excuse to raise oil .