Another Crude Oil Record

Price Breaks Yesterday's Record On Worries About U.S. Gasoline Stocks

(CBS/AP)  Oil prices hit a record high of $72.49 Thursday after weekly data showed a drop in U.S. gasoline stocks, raising worries that refiners don't have an adequate inventory cushion ahead of the peak summer driving season.

Traders also are anxious that U.S.-led efforts to stop Iran, OPEC's second-largest member, from pursuing a suspected nuclear weapons program could lead to a disruption in Persian Gulf oil supplies.

Gasoline prices were soaring all over the country, passing $3.00 a gallon, and in some places, even $4.00.

"I do regular. I prefer to do super but I don't and it costs $50 to fill this up. It used to cost $25," said a woman at a San Diego area gas station.

"I think people are going to make better choices about the cars they drive. And the people who decide to drive these are going to have to pay the consequences," said a man at the same station.

"I got to drive. I have no choice. I live in the hills. Buses don't run there," said Mary Benedetto, filling up at a Los Angeles station.

Light, sweet crude for May delivery surpassed the previous intraday record of $72.40, set Wednesday, in electronic trading on the New York Mercantile Exchange. The price then slipped back to $72.30 a barrel, up 13 cents from Wednesday's record close of $72.17.

"The market is sizzling!" said Victor Shum, energy analyst at Purvin & Gertz in Singapore. "The gasoline stockdraw was large and it has raised concerns over gasoline supply in the U.S., which is really what's behind the price surge."

"Unrest in the Middle East, the price goes up. Local supply issues, the price goes up. Just basically, anything burps, and the price goes up," Seattle independent station owner Harold Hezel told Chris Filippi of CBS radio affiliate KIRO-AM (audio). He's charging $3.26 a gallon for regular.

"Outrageous — and trust me, I am driving as little as possible," said a Pittsburgh motorist. "People are getting hit hard at the pump."

In its weekly report, the U.S. Energy Department said the nation's supply of gasoline shrank by a larger-than-expected 5.4 million barrels last week to 202.5 million barrels. The decline, the seventh in as many weeks, pushed gasoline stocks to 4.6 percent below year ago levels, their lowest level since November.

Gasoline inventories typically decrease this time of year as refiners shut down their plants to perform maintenance ahead of the summer driving season.

There is additional worry about summer gasoline supplies because of the prospect of tight supplies of ethanol, which is needed in increasing amounts as refiners phase out their use of methyl tertiary butyl ether, or MTBE, which has been found to contaminate drinking water.

Government experts are sticking to their forecast that the national average for gasoline prices will not stay at $3 — at least not for as long as a whole month, reports CBS News correspondent John Hartge (audio). They list several factors: Refineries down for maintenance are getting back online, as are three knocked out by Katrina, so more gas should be available. Government experts expect pressure on crude oil prices to lessen and ethanol shortages to be limited to regions. If it plays out as they expect, gas prices could actually fall — though not as much as they've risen.

On London's electronic ICE futures exchange, June Brent crude rose to a record high of $74.22 a barrel before retreating to $73.82 a barrel, up 10 cents from Wednesday.

Concerns about Iran continue to lift oil prices. Diplomats said Wednesday that the United States may turn to the U.N. nuclear watchdog agency to exert more pressure on Iran out of frustration with Russian and Chinese opposition to firm Security Council action.

On Wednesday, Iranian President Mahmoud Ahmadinejad said that record crude oil prices were still below their "real value," though he stopped short of saying Iran would use its vast resource as a weapon.

China is a big part of the current oil price rise, reports CBS News correspondent Celia Hatton (audio). Its growing economy has fueled an increasing consumption of crude.

The U.S. Energy Department report also showed that crude oil stocks fell by 800,000 barrels last week to 345.2 million barrels, while distillate stocks, which include heating oil and diesel fuel, fell 2.8 million barrels.

Gasoline futures rose fractionally to $2.2395 a gallon while heating oil prices fell 0.15 cent to $2.0608 a gallon. Natural gas prices fell 2.8 cents to $8.220 per 1,000 cubic feet.