Alaskan pipeline shutdown rockets crude oil to record highs

| 8/8/2006

Crude oil prices shot up by about $2 a barrel following a British Petroleum shutdown of 8 percent of the United States' oil supply because of corroded pipes in Alaska.

At midday Tuesday, crude was trading at a near-record-high price of $77 a barrel.

CNN reports that western states may be hit hardest by the shutdown, because most of the Alaskan oil – which could be out of commission for weeks or even months – is refined in California and Washington state.

On Monday, BP announced that it would cease production at Alaska's Prudhoe Bay, a field that produces roughly 400,000 barrels a day. The decision came after the company discovered what it called “unexpectedly severe corrosion and a small spill from a Prudhoe Bay oil transit line.”

BP's press release indicated it had contained the spill and started clean-up efforts.

Meanwhile, The Associated Press reported that the Energy Department has a plan in place to pull oil from the Strategic Petroleum Reserve if it's needed to keep fuel flowing.