GETTING OILED - Crude Reaches All-time High, $50 A Barrel

(09/29/2004)

Drivers, homeowners who use oil for heating and energy-intensive industries will feel the sting from yesterday's increase in crude. The price of crude oil reached an all-time record - $50 a barrel. Analysts said Tuesday that prices could keep rising because of a sharp rise in global demand, tight supplies and threats to output in petroleum-producing nations such as Iraq and Nigeria. This year's surge in prices has resulted in "a major redistribution of income from oil consumers to oil producers" and has been a drag on the American economy, according to economist Nigel Gault at Global Insight. The 75 percent increase in the price of oil in the past year has yet to become a major political issue in the presidential election. With winter coming it is bad news for those who heat their homes with fuel oil, and could translate into higher bills for homeowners using natural gas, whose price tends generally move in sympathy with crude. Homeowners using heating oil might spend anywhere from $250 to $500 more this winter, assuming they burn about 1,000 gallons during the season. Although the average cost of unleaded regular gasoline have risen more than 7 cents a gallon over the past two weeks. That's 33 cents above last year. Surging prices for diesel and jet fuel, which are similar to heating oil in their chemical composition, are already squeezing the trucking and airline industries. The average retail price of diesel fuel has risen 41 percent in the last year to $2.01 a gallon.

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