By Joe Benton
ConsumerAffairs.com
August 7, 2006
With consumers already paying summertime gasoline prices that are near record highs, BP announced that the oil company must shut down the biggest oilfield in the country, Alaskas Prudhoe Bay.
The action could mean another 3 to 5 cents in the price of a gallon of gasoline as demand will begin to pressure already tight supplies. That will push the average national gasoline price above the record set in September following Hurricane Katrina.
The average price for a gallon of unleaded regular now stands at $3.036 according to the AAA Fuel Gauge. The record high is $3.057, set September 5, 2005.
The price of gasoline is above the record high in 21 states and now sells for more than $3 a gallon in 28 states and the District of Columbia.
The oil company blamed "unexpectedly severe corrosion" in the Alaskan pipeline for shutting down the system which cuts daily U.S. oil production by 400,000 barrels. Oil futures prices jumped nearly 2 percent following the BP announcement.
U.S. light crude jumped $1.29 to $76.05 a barrel in electronic trading while Brent crude trading in London rose 99 cents to $77.16. Gasoline futures rose 3.35 cents to $2.265 a gallon.
The Energy Department will consider loaning emergency supplies of crude oil to refiners caught short of supply following the shutdown, according to a department spokesman.
OPEC indicated that the cartel would also work to ensure that there are no oil shortages. The group issued a statement that also said its spare production capacity was more than adequate to take care of any shortfall.
The Alaskan pipeline has been in operation for more than 30 years. The latest problem was discovered when an inspection completed in late July revealed 16 "anomalies" in 12 locations in a pipeline on the eastern side of the oil field.
"We regret that it is necessary to take this action and we apologize to the nation and the State of Alaska for the adverse impacts it will cause," newly appointed BP America Chairman and President Bob Malone said in a statement.
BP gave no estimate on how long the field would be offline.
