Turmoil sparks oil, gas price rises on LI

Heating oil and gasoline prices on Long Island rose in the past week to their highest winter levels ever and the most since 2008 as continuing unrest in the Middle East raised the specter of supply interruptions.

Regular gasoline was up 3.3 cents to an average $3.456 a gallon Wednesday, according to the AAA - 60 cents higher than a years earlier. Heating oil rose 5.7 cents to an average $3.811 a gallon, said the state Energy Research and Development Authority - 74.8 cents a gallon more than a year earlier.

Experts say the worst-case scenario for consumers would be the interruption of supplies from Saudi Arabia, the world's largest oil producer. Some experts say that would lead within weeks to gasoline at $5 per gallon or even higher at U.S. pumps, though others think that forecast is too extreme.

Vance Scott, head of A.T. Kearney's Energy practice, who is based in Chicago and spends about half his time in Saudi Arabia, thinks a violent upheaval in that country is unlikely. He added that spare capacity there and in other OPEC and non-OPEC nations would eventually fill any supply gaps caused by unrest in other nations, including Libya, where protests and the government response have been most extreme in recent days.

Libya supplies little crude oil to the United States, experts said, but it supplies refineries in Europe that produce significant amounts of gasoline for U.S. drivers, especially in summer and particularly on the East Coast.

Reuters calculated Wednesday that more than a quarter of Libya's oil output has been shut down. Saudi Arabian and OPEC officials have tried in recent days to allay fears by promising an increase in their output if Libya's oil disappears from the market.

Scott says, however, that the rise so far in U.S. benchmark crude oil's price since last week - from about $86 a barrel to a settlement Wednesday in New York at $98.10 a barrel after touching $100 - is likely, unless it reverses, to add 10 or 15 cents a gallon to U.S. gasoline pump prices within the next two weeks, and probably a total of 50 cents in the next month or so. "It translates through pretty quickly," he said.

But Carl Larry, president of Oil Outlooks & Opinions Llc, a research and consulting firm in Houston, notes that gasoline inventories are at record levels, while demand remains essentially flat with last year.

"I just don't see jumps in price that much that fast," he said, adding that he foresees no more than a 20-cent increase at the pumps resulting from crude's increase since last week.

And experts said higher prices would curtail consumption all over the world - as occurred in 2008 - easing the supply crunch.

Gallon of gasoline (Regular)

Yesterday: $3.456

Week ago: $3.423

Year ago: $2.852

Gallon of heating oil(Full-service dealers)

Feb. 21: $3.811

Feb. 14: $3.754

Year ago: $3.063

Sources: AAA for gasoline prices; New York State Energy Research and Development Authority for heating oil prices