Crude oil, diesel prices continue to set records

| Thursday, August 11, 2005

Both crude oil and diesel prices set records on Thursday, Aug. 11, with crude oil topping $66 per barrel and diesel prices reaching as high as $3.43 per gallon in California.

Trading for light, sweet crude lurched beyond $66 per barrel in trading on the New York Mercantile Exchange on Thursday, before dropping back down closer to the $65 mark.

Meanwhile, ProMiles reported an average price of $3.01 per gallon for California on Aug. 11. Individual stations, however, were pushing prices well beyond that. A Shell station in Pasadena confirmed for “Land Line Now” that its diesel was selling at $3.43 Thursday morning. Several other stations had posted prices between $3.30 and $3.40 per gallon, according to the Web site CaliforniaGasPrices.com. 

Refinery troubles and tight supplies are being blamed for skyrocketing diesel costs in California, but a Los Angeles Times story revealed there may be another reason.

The Times reported that, in June, oil traders sold large quantities of diesel to Chile and Mexico. At the time, traders maintain, they were faced with an oversupply of diesel, so they sold some of the surplus to buyers in Chile. The fuel that went to Mexico was said to have too much sulfur content to be used in the United States.

Unfortunately, the timing was bad. The sale occurred just days before a fire shut down a Chevron oil refinery in El Segundo, CA. So without the surplus, the state was unable to handle the post-fire shortage.

Because of the fire, Chevron has limited sales to its own stores and to customers with supply contracts.

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