Opec, the oil producing cartel, has warned that the price of crude could keep rising to reach $200 a barrel.
On Monday, US crude oil hit a new record of $119.93 a barrel. Prices rose over fears about the disruption caused by the Grangemouth refinery strike that shut down a key North Sea pipeline, and supply problems in Nigeria following pipeline attacks. Attacks on Royal Dutch Shell’s pipelines in Nigeria led to a drop in production of about 169,000 barrels per day for shipments in April and May.
The price of oil has been rising steadily since January, when it broke through the $100-a-barrel mark. Prices have risen nearly 25% this year, and this week they passed the previous record mark of $119.90 a barrel achieved last Friday. Opec blamed the increasing prices on the falling value of the US dollar, which makes other assets, including oil, more attractive for foreign investors.
The Ineos refinery at Grangemouth provides steam and electricity for the BP-run pipeline from the Forties oil fields in the North Sea, providing a third of UK oil output.
Grangemouth’s closure caused up to 70 platforms in the North Sea to either shut down or reduce production of oil, resulting in the loss of 700,000 barrels of oil a day. BP has said it will take weeks for the refinery to return to full capacity.
Some petrol stations in Scotland and northern England introduced rationing or raised prices.
In addition to regular attacks on oil facilities in Nigeria and the weak US dollar, general concerns about the ability of supply to meet global demand have been a key factor in this year’s price rises.
However oil producers’ body Opec says there is no immediate need to lift production levels before 2012.
At the same time, oil companies Shell and BP have made huge first-quarter profits thanks to the rising price of oil.
Shell made profits of $7.8bn (£3.9bn) in the first three months of the year, up from $6.9bn a year ago. BP saw its profits rise 48% to $6.588bn (£3.31bn), from $4.4bn.
In January, Shell reported annual profits of $27.56bn (£13.9bn) for 2007, a record for a UK-listed company.
But remember that from petrol that costs £1.08 per litre, 33p goes to the oil company, 9p to the retailer, 50p is fuel duty and 16p is VAT so 66p, or 61%, goes to the government.
So does anyone yet see a need to accelerate efforts to find a replacement to oil?
Come and see the latest vehicles that use less oil than most, at Green-Car-Guide Live! 2008, the UK’s largest Green Motor Show.