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Daily Mail: Pump price war as crude slumps

Sam Fleming,
26 September 2006

A price war erupted at petrol pumps and energy shares tumbled after the cost of oil plunged to a seven-month low. 

News of the early restoration of output at Alaska’s biggest field and hopes that sanctions against Iran will be avoided, sparked the tumble.

Oil has slumped by more than $17 a barrel since early August, its sharpest decline in more than 15 years.

Signs of a benign hurricane season in the Gulf of Mexico also helped push the cost of a barrel of Brent crude to $59.50 during the day. It later recovered to finish at $60.50.

Royal Dutch Shell ‘B’ shares fell 20p to 1739p in London, while BP slid 12½p to 561½p, its lowest price since the middle of last year.

BP announced it could resume most of the output from its troubled Alaskan field, Prudhoe Bay, which has been dogged by spills and pipe corrosion.

Fears that the US is entering a pronounced economic slowdown exacerbated declines. American house prices fell for the first time since 1995, sparking fears that consumer demand in the world’s biggest economy could suffer.

Tesco promised to cut prices by up to 2p while Asda said it was lowering its rate for the fifth time in as many weeks, pushing unleaded petrol down 1p to 84.9p per litre and diesel to 89.9p per litre.

Energy traders predicted that OPEC may act to put a floor under the price of crude. The cartel is due to reconvene in December, but it could call an emergency meeting at any time to cut quotas of 28m barrels a day.

Eoin O’Callaghan, an oil markets analyst at BNP Paribas, said the cartel is deeply worried about the prospects for the US economy, suggesting it may let prices fall further.

High oil prices have been a key driver of inflation fears around the world, but economists cautioned against assuming that central banks will hold off from further rate hikes.

Bank of England Deputy Governor John Gieve said an easing in energy prices could boost personal incomes and strengthen consumer spending, leading to further inflation.

He said he came close to backing another rate hike at this month’s meeting of the Bank’s Monetary Policy Committee. and its sister non-profit websites,,,,,, and are owned by John Donovan. There is also a Wikipedia feature.

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