Gas prices soar in Oakland after Mideast attacks By: HANK SCHALLER, News Reporter October 13, 2000 Oakland County motorists began to dig deeper to buy gasoline Thursday after a terrorist attack on a U.S. Navy destroyer in Yemen and escalating violence between the Israelis and Palestinians.

A drive down M-59 through Waterford and White Lake townships revealed most service stations were selling self-serve unleaded regular gas for $1.559 a gallon or more, up from the average price of $1.476 a gallon for Oakland, Wayne and Macomb counties that AAA Michigan reported Monday.

"Anytime something like this happens in the Middle East it puts fear in the supply and distribution system for gasoline," said Terry Burns, executive director of the Lansing-based Service Station Dealers Association of Michigan.

"It affects crude oil prices, which immediately impact distribution prices and the prices that motorists have to pay at the pump," Burns said. "Service station dealers have been experiencing steady wholesale price increases every day this week. Until the traders in oil get more comfortable, prices will continue to rise."

The situation in the Middle East has created lots of anxiety on Wall Street, said David Littmann, senior vice president and chief economist of Detroit-based Comerica Bank.

"The anxiety levels have gotten to the point where some traders are revisiting the concerns of 1973 and 1979," Littmann said, referring to two periods of short crude oil supplies. "As long as that anxiety remains, crude oil prices will remain at choking levels."

Those worries drove the price for crude oil futures as high as $37 a barrel Thursday, near its 10-year high of $37.80 reached last month. Later, crude oil was trading at $35.30 a barrel, up $2.05. Heating oil futures also jumped Thursday, trading as high as $1.11 a gallon. They later fell to $1.07 a gallon, still up 5.22 cents.

Although surging oil prices will slow the U.S. economy, Littmann said the increases have "all the hallmarks of an event that will trip the fragile economies in Southeast Asia and hurt growth in Europe." Rising oil prices could eventually lead the Fed to approve interest rate reductions during the first part of 2001, he said.

The attack on the USS Cole came as Israeli helicopters blasted Yasser Arafat's residential compound and other Palestinian targets Thursday, retaliating for the killings of three Jewish soldiers. Thursday's events make it even more difficult to predict what will happen in already uncertain oil markets.

Oil prices have risen steeply this year, as the Organization of Petroleum Exporting Countries curtailed production and U.S. supplies shrank. That has sparked concern that as winter draws near, the price American consumers pay for heating oil could skyrocket.

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-- Martin Thompson (mthom1927@aol.com), October 13, 2000