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Crude Oil Prices Grease Inflation Worries

SUZANNE PRATT: Inflation worries heated up today as the government released its latest report on consumer prices. At the same time, oil prices, a big component of that report, spurted to a new record. The March consumer price index rose 0.3 of 1 percent, while the core rate, which excludes energy and food prices, ticked up 0.2 of 1 percent. Both numbers were in line with Wall Street expectations. Light sweet crude for May delivery crossed $115 a barrel for the first time, closing at $114.93, up $1.14. Erika Miller looks at what's behind the latest surge in energy prices.

ERIKA MILLER, NIGHTLY BUSINESS REPORT CORRESPONDENT: If you think $115 a barrel is high for crude, brace yourself. New York Mercantile Exchange floor trader Joe Marshall sees even steeper prices in the days ahead.

JOSEPH MARSHALL, OIL TRADER, MCNAMARA OPTIONS: I don't think you're going to get many people to come in and stand in its way. So once it gets above $115 and stays there for a day or two, you really may have another blow-off run to $120.

MILLER: The bullish sentiment is being driven in large part by worries about potential gasoline shortages this summer. Today the Energy Information Administration reported that crude inventories dropped by 2.3 million barrels last week. Supplies of gasoline fell by 5.5 million barrels. Both declines were more than analysts expected. Oil prices are also being boosted by the falling dollar, which hit a new low against the euro today. That helps make oil more attractive to overseas investors.

MARSHALL: The lower the dollar goes -- crude oil is priced in dollars - so the more that you can buy. So it lends support to the market.

MILLER: But oil analyst Sal Ilaqua does not believe the dollar has much to do with the recent rally.

SAL ILACQUA, OIL ANALYST, MONNESS, CRESPI, HARDT & CO.: I find it hard to figure out why the dollar is such a big factor in oil prices. I know a lot of people say that. I think it's more fundamentals and the flow of funds looking for a place to make a quick dollar.

MILLER: Ilaqua thinks crude may be riding a speculative bubble that could soon pop. But he doesn't see prices falling below $90 a barrel this year. Still, that would be good news for drivers grappling with record prices at the pump. According to AAA, the national average of regular unleaded is now $3.39 a gallon. Already many analysts are warning of higher gasoline prices in coming weeks. They say $3.50 a gallon is practically a given and $4 is not much of a stretch. Erika Miller, NIGHTLY BUSINESS REPORT, New York.