Heating oil and gasoline prices in Maine continued their slow but steady climb, with the global petroleum market made unstable by the increasingly violent events in the Middle East.
On Tuesday, the state reported the average price for home heating oil increased by a penny a gallon last week to $3.37. John Kerry, director of the governor’s Office of Energy Independence and Security, noted the petroleum market remains unstable and volatile with the political unrest and violence in Libya, combined with continuing cold weather and rising consumer demand.
Globally, oil prices hit a two-year high as Libyan leader Moammar Gadhafi urged his supporters to attack protesters who are challenging his 42-year rule.
Benchmark West Texas Intermediate for April delivery jumped $5.71, or 6.4 percent, to settle at $95.42 per barrel on the New York Mercantile Exchange. Oil hasn’t been that high since it settled at $97.92 on Oct. 1, 2008.
Libya is the world’s 15th largest exporter of crude, accounting for 2 percent of global daily output. It also has the largest oil reserves in Africa.
“The Mideast unrest does have an effect on the commodities futures trading prices, which translates into real prices,” said Jamie Py, president of Maine Energy Marketers Association.
“Whether or not there’s a real or illusionary supply-and-demand problem, you can see a short-term run-up in the prices.”
While the events in the Middle East are, literally, revolutionary, the region has seen endless unrest for decades, Py noted. The situation in Libya is one factor in high oil prices. Another factor, he said, is that because the federal government’s fiscal policy is putting more money into the market, more traders are getting into commodities. So there is increased trading volume in commodities, and greater volatility.
“You’ve got an already anxious commodities market, then you couple that with it a little anxious tension in the Mideast and it’s causing some uncertainty,” Py said.
Robert Moore, president and CEO of Dead River Co., noted that the crude price has increased by more than $7 a barrel. That will mean an increase of at least 10 cents for consumers, he said. It could get worse, or it could get better — there’s a lot of uncertainty, he said.
There’s almost an oversupply of crude in the United States, Moore said. But some of the U.S. crude will likely go to Europe to help with supply there — driving up prices here, he said.
“It’s the price you pay when you have a global product,” said Moore. “Sometimes you win, sometimes you lose. Right now we’re losing.”
Meanwhile, retail gasoline prices in the U.S. held steady overnight at a national average of $3.171 per gallon.
In Maine, the average statewide price for a gallon of regular was $3.229 on Tuesday, according to AAA. That’s up from $3.212 a week ago, $3.202 a month ago and $2.703 a year ago.
The Associated Press contributed to this report.