Oil Price Surge Seen After Blast

www.newsday.com By James Bernstein STAFF WRITER

February 22, 2003 Motorists and homeowners, already paying some of the highest prices for gasoline and heating oil in years, are expected to be hit in the wallet even harder after Friday's barge explosion off Staten Island, energy industry experts said. Home heating oil prices may rise 5 cents a gallon, and gasoline 3 cents to 5 cents, in the next few days, analysts said. Some heating oil dealers on Long Island said they already had been notified of increases. "Right now, because supplies are so tight, even a minor disruption can cause a price rise," said Phil Flynn, senior energy trader at Alaron Trading Corp. in Chicago. "This should serve as a big wake-up call as to how tight supplies are." Crude oil prices shot up after the explosion but leveled off, with oil for April delivery closing at $35.58 a barrel, up 84 cents, on the New York Mercantile Exchange. Gasoline futures for March delivery rose 4.67 cents to $1.0125 a gallon and March heating oil futures gained 4.93 cents to $1.108 a gallon. Flynn said the U.S. oil supply is currently at about 268 million barrels, the lowest since 1975. That does not include the approximately 570 million barrels in the U.S. Strategic Petroleum Reserve, which the government so far has declined to tap. Flynn said about 50 percent of the oil used in the New York area passes through the Arthur Kill, the waterway between Staten Island and New Jersey that was closed after the explosion at an Exxon Mobil terminal. John Nuzzi, owner of Nuzzi Fuel Oil Co. in New Hyde Park, said he was notified at 2 p.m. by a wholesaler of a 5-cent-a-gallon price rise. "This is a gasoline fire [on Staten Island] but all markets are affected," said Nuzzi, whose company has 3,000 customers. "It's a knee-jerk reaction." Nuzzi said he believed prices would fall again by early next week. Other experts said they were not so certain. Oil prices are up almost 18 percent so far this year in anticipation of a U.S.-led war against Iraq, a strike in Venezuela and the tight supply situation.