New York Crude oil prices soared to $100 a barrel Wednesday for the first time, reaching that milestone amid an unshakable view that global demand for oil and petroleum products will outstrip supplies.
Why is this happening? Surging economies in China and India fed by oil and gasoline have sent prices soaring over the past year, while tensions in oil-producing nations such as Nigeria and Iran have increasingly made investors nervous and invited speculators to drive prices even higher. Raids Tuesday on Port Harcourt, the center of Nigeria's oil industry, and word that several Mexican oil export ports were closed due to rough weather, helped give crude the final push to $100.
U.S. reaction: The White House on Wednesday said it would not release oil from the nation's strategic reserves to drive prices lower. As of early November, the Strategic Petroleum Reserve contained 694 million barrels of oil. The government is working to fill it to its 727 million barrel capacity.
Effect on the pump: Gas prices rose 0.6 cents Wednesday to a national average of $3.049 a gallon, according to AAA and the Oil Price Information Service. The lowest price in Lawrence on Wednesday was $2.84 per gallon.Gas prices, which typically lag the futures market, have edged higher in recent days, following oil's approach to $100.
Lasting impact? Gas prices peaked at $3.227 a gallon in May as refiners faced unprecedented maintenance issues and struggled to produce enough gasoline to meet demand. A similar scenario is expected this spring, when gas prices could peak above $3.40 a gallon, according to the Energy Department's Energy Information Administration.
Other energy: February heating oil futures rose 9.1 cents Wednesday to settle at a record $2.7404 a gallon after setting a trading record of $2.7465, while February gasoline futures climbed 7.81 cents to settle at a record $2.5689 a gallon after setting their own trading record of $2.5784.