For first time, oil hits $100 a barrel

ByABC News
January 3, 2008, 1:06 AM

— -- The price of oil hit $100 a barrel in commodities trading Wednesday the first time that's happened and ended the trading day not far below that chilling mark, at $99.62 a barrel.

That's a hefty $3.64 jump from the previous closing price for benchmark West Texas Intermediate crude oil, leapfrogging the record $98.18 set Nov. 23.

In fact, oil has been in or near record territory for two months, but Wednesday's jump was surprisingly large and created enough momentum to pull wholesale gasoline and heating oil prices to records that quickly will translate into big retail price boosts.

The striking prices prompted travel organization AAA to issue a warning that "record high prices will be paid by consumers for gasoline in the year ahead." The highest in AAA records is a nationwide average $3.227 on May 24. The U.S. average Wednesday was $3.049 a gallon, AAA said 72.7 cents more than a year ago.

The price of oil accounts for roughly two-thirds of the pump price of gasoline, according to the U.S. Energy Information Administration.

High prices this time of year are especially unsettling, AAA spokesman Geoff Sundstrom noted, because fuel prices typically don't start their seasonal climb until spring. That's when driving increases, raising demand for gasoline.

Also, refineries are required by law to switch to a type of clean-air gasoline by June 1 every year. That fuel is more expensive to make, driving up prices. And refineries sometimes cut production temporarily to make the switch, putting more pressure on supplies.

Oil prices have been in the high $90s for weeks, but the jump to the $100 mark Wednesday came as a reminder that fuel prices might have no ceiling.

"But in terms of meaningful economic impact, I don't think (Wednesday's) move is significant; $100 oil isn't that much more than $98 oil," he says.