Light, sweet crude for July delivery rose as high as $133.38
a barrel in afternoon trading on the New York Mercantile Exchange.
Meanwhile, AAA reported that the average price for a gallon
of both unleaded gas and diesel fuel set yet another record Wednesday. The
average price of a gallon of gas in the U.S. reached nearly $3.81 - up more
than 30 cents from a month ago and 60 cents from a year ago.
Prices are already as high as $4 a gallon for gas in many
parts of the country, and the number of stations charging $4 or more rises each
day. Prices are nearing $5 a gallon in parts of Alaska.
"The market is in a very bullish mood and these
statistics will do nothing to change that," Tom Bentz, an analyst at BNP
Paribas Commodity Futures Inc., told Reuters.
Analysts say crude has been boosted in recent days by
especially strong demand for diesel in China, where power plants in some
areas are running desperately short of coal and certain earthquake-hit regions
are relying on diesel generators for power.
Supply worries, rising demand and a slumping dollar are
conspiring to make filling up the car -- and paying for just about everything
else -- a growing burden for Americans.
In response to the record-high fuel prices, American
Airlines announced Wednesday that it will begin charging passengers $15 for
their first checked bag, cut domestic flights and lay off workers. Its parent
company's shares fell 15 percent after the announcement was made at its annual
shareholders meeting.
Last month American announced it would join other carriers
in charging $25 for second bags checked for some passengers, but it wasn't
immediately clear how Wednesday's announcement would affect that.
Wednesday's
oil price surge came as top executives of the five largest oil companies
testified on Capitol Hill and tried to shift anger over high prices to a debate
over supply, leading a senator to accuse them of acting like "hapless
victims" while racking up record profits.
Patrick
Leahy, D-Vt., told the executives there's "a disconnect" between
normal supply and demand and the soaring price of oil that the industry has yet
to explain, the Associated Press reported.
J. Stephen Simon, executive vice president of
Exxon Mobil Corp., said profits have been huge "in absolute terms"
but must be viewed in the context of the large scale of the industry. He also
said high earnings are needed "in the current up cycle" to pay for
investments in the long term when profits will be down.
"'Current up cycle,' that's a nice
term," Leahy testily replied, "when people can't afford to go to
work" because gasoline is costing close to $4 a gallon.
The
five companies -- ExxonMobil, ConocoPhillips, Chevron, Shell and BP America --
earned $36 billion in the first quarter of this year.
The executives, appearing before the Senate
Judiciary Committee, said they know the burden high prices impose, but said the
cause is not company profits but global supply and demand, according to the AP.
They also sought to use their appearance before Congress to argue against new
taxes on their industry
"I
urge you to resist these punitive policies," said vice chairman of Chevron
Corp. John Hofmeister.
The
oil price rally was fed in part by a report from the Energy Department's Energy
Information Administration, which said crude inventories fell by more than 5
million barrels last week.
Energy
Secretary Samuel Bodman said Wednesday that there was nothing the government could do
to ease the pain of soaring fuel prices for consumers and added that a rise in
speculative investment in commodities was not behind the rally.
"We have flat (oil) production ... and increasing
demand," Bodman said. "I don't think anything can be done near
term," he said.
The Organization of the Petroleum Exporting Countries has
blamed oil's spiking costs on speculation and the weak U.S. dollar and has
repeatedly rebuffed calls from consumer nations for more supply.
OPEC's biggest producer, Saudi Arabia, said last week it has
raised production by 300,000 barrels, but only to offset production problems
among other members of the organization.
