BP closed down the Prudhoe Bay oilfield in Alaska today because of problems with their pipeline, problems severe enough that it may be closed for months. It is 8% of US capacity gone overnight. Prices are expected to add ten dollars a barrel. Today oil closed in London at over $78/barrel.
Their problems are corrosion, however we can expect additional issues as pipelines built on permafrost start to fail as the frost melts.
We’re experiencing a ‘perfect storm’ for driving oil prices up: Katrina, war in the Middle East, poor relations with Venezuela and now this. The true paranoids including some highly respected economists see oil hitting $300. This would translate to around $12/gallon. That should get the attention of even the most sceptical deniers out there.