NEW YORK – U.S. retail gasoline prices are poised to strike a record after suspected pipeline corrosion in Alaska forced shut the nation's largest oil field, AAA travel group said Monday.
International oil giant BP began turning off the taps over the weekend at its Prudhoe Bay field after finding a leak from a rusty pipeline, a move that will slash 8 percent from U.S. crude production and threatens to slow fuel output at some refineries on the U.S. West Coast.
"Our assessment of this is that it is likely to have major implications on the market," said Mantill Williams of AAA in Washington. He urged motorists not to engage in panic buying, adding that there is enough supply to meet demand.
U.S. gasoline prices averaged $3.036 a gallon Monday, just below the peak last September of $3.057 a gallon, according to AAA's daily survey of more than 85,000 retail stations.
Prices in California, which typically run higher than the national average due to stringent environmental rules, were running over $3.20 a gallon and could push higher if the field shutdown causes refiners on the West Coast to slow fuel production.
Most Alaskan crude is used by refineries in California and Washington. BP said Monday it could be weeks or months before the field restarts.
"I think this situation reminds us how delicate or volatile the situation is. It takes very little to drive up prices. It shows how fragile the distribution system is," said Williams.
U.S. crude oil prices jumped more than $2 a barrel Monday at the New York Mercantile Exchange in response to BP's oil field shutdown.
Energy Secretary Bodman said Monday the government stood ready to make emergency oil loans to West Coast refineries from the nation's Strategic Petroleum Reserve to help offset the loss of Alaskan supplies.
California refineries received 135.9 million barrels of Alaska North Slope crude, or 20.2 percent of total 2005 inputs, according to California Energy Commission data.
While the shutdown is likely to boost energy prices, analysts are not expecting pumps to run dry.
This "certainly isn't going to create any shortages in gasoline, diesel fuel and other petroleum products," Tancred Lidderdale, analyst with the U.S. Energy Information Administration, told Reuters early Monday.