Drivers are feeling the pinch from record high gasoline prices in the United States, but they should be happy they’re not buying diesel.

The price of diesel has shot up nearly 50 percent since a year ago to $4.27 a gallon, touching off a rash of minor protests by U.S. long-haul truckers in recent weeks.

By comparison, gasoline prices have risen only about 21 percent since a year ago to a relatively modest price of $3.67 a gallon on average, according to the daily price survey from the AAA.

The price of both key fuels has been tracking the soaring cost of crude — which is up sixfold since 2002 because of increasing demand from China and other developing countries.

But why would diesel rise so much faster than gasoline?

One theory is that worsening electricity supply problems in countries like China, South Africa, Chile, Argentina, and parts of the Middle East has increased demand for middle distillates like diesel for use in temporary power generators.

Whatever the cause, the increase in world demand for diesel has boosted U.S. fuel exports to their highest since 1991 and helped push U.S. distillate supplies to 3 percent below a year ago, according to the most recent data from the U.S. Energy Information Administration.

U.S. gasoline supplies, meanwhile, are running at a surplus.

The world’s biggest oil company and the world’s No. 7 crude exporter are trading blows in a dispute that is further eroding the U.S.-Venezuelan relationship and putting energy supply on the line.

Exxon, which was pushed out of a huge Venezuelan heavy oil project last year as part of a nationalization drive, has taken the country to court in an effort to secure compensation, winning orders freezing $12 billion in Venezuela’s assets around the world. 

In response, Venezuela has railed against Exxon’s legal “terrorism” and has stopped oil sales to the company. Venezuelan President Hugo Chavez, who has accused the Bush administration of backing a failed coup to overthrow him, has also said Exxon’s courtroom assault is part of a plan orchestrated by the Bush administration to oust him.

Big scary moves that could further cool the already frigid relationship between Washington and Caracas, which have steadily declined since Chavez first won office in 1998 despite the two nations’ close economic ties.

But for the moment, there doesn’t seem to be much real impact on the availability of oil to the market. While oil prices have rallied on the rising tensions, analysts say the effect of the fight on U.S. oil supplies and on the operations of Exxon Mobil or Venezuela’s state energy company appear almost nil.

“Venezuela doesn’t want to halt sales because Chavez needs the revenue,” said Eric Wittenauer, analyst at AG Edwards.

“It looks like Exxon Mobil can pretty much buy from others the same oil Venezuela is denying it,” said Mark Waggoner, president of Excel Futures.

$100 a barrel didn’t last long.

After skyrocketing to the all-time peak earlier this month, oil prices have dropped 10 percent to a slightly more managable $90 a barrel — and the world’s energy brainiacs are a bit conflicted over whether this multi-year rally is over.

 Why? To borrow from James Carville, it’s the economy, stupid.

A housing crisis and a credit crunch (not to mention the high price of gasoline at the pump) are showing signs of dragging down U.S. growth. Some economists are predicting a recession. Such a slowdown in the world’s biggest energy consumer has the potential to slow fuel consumption, analysts say – crimping trucking, travel, and manufacturing — and could also threaten the runaway growth in energy demand from developing nations like China. Meanwhile, auto companies are busy designing smaller, more efficient cars in a rush to fuel economy not seen since the 70s.

On the other side of the coin — and there always is one —  OPEC appears to like strong oil prices. The cartel, which shrugged off calls for an output hike in December when oil first flirted with the triple digits, has been equally cool to Bush’s request this week for more supply, signaling a continued tight-fisted policy.  Add to that the weak U.S. dollar and foreign government fuel subsidies that experts say could insulate non-U.S. energy consumption despite a U.S. slowdown, plus instability in big oil producer nations, and you’ve got the ingredients for continued high oil prices. 

Guess we’ll have to wait and see.

President George W. Bush will sign into law an energy bill this week that will boost fuel efficiency of U.S. cars and trucks for the first time since 1975, and require a huge increase in the use of biofuels like ethanol.

The move comes in a year oil prices struck an all-time high near $100 a barrel amid concern that demand is rising more quickly than supply.

Oil prices have slumped more than 10 percent in less than two weeks as traders focus on signs a slowing U.S. economy could cut into world energy demand growth. After climbing to a record over $99 a barrel Nov. 19, the price of crude has dropped to below $88.

The decline in crude prices may eventually filter down to consumers in the form of cheaper gasoline and heating oil. But it could also lead oil cartel OPEC to decide against a widely-requested increase to crude output when it meets in Abu Dhabi on Dec. 5. 

With oil prices flirting with the $100-a-barrel mark, analysts are wondering how much the U.S. consumer can bear.  

A Reuters/Zogby poll released Wednesday shed some light on the question, showing that more than three-quarters of Americans will cut fuel use or slash spending on retail and entertainment if their energy bills keep on rising.

Do you think $100 crude will force Americans to conserve?

U.S. crude oil prices gushed to a record over $94.50 a barrel Wednesday after a government report showed a surprisingly big decline in stockpile levels last week. And more declines in inventories could be on the way.

Energy analysts are saying the industry is selling off huge amounts of oil in storage because of the shape of the forward price curve — oil prices get cheaper for delivery out into the future — and the market may now be in a vicious circle…. or perhaps a hampster wheel.

“We’re in a hampster wheel right now,” said Stephen Schork, editor of the Schork Report. “Given the economics of what it takes to store oil, it makes no sense to hold onto inventory right now. Storage owners are taking the economically prudent step and dumping inventories because of the backwardated market structure.”

He explained that having a storage tank full of crude that loses value over time makes it a wise choice for energy players to sell onto the physical market now, rather than later.

“If you were managing storage for an oil company you could be sued for malpractice for adding to storage last week. This can only end when there is not enough prompt demand to sop up supply on the spot market. Only then can we switch back into a contango structure which would be conducive to building up storage levels,” he said.

NOTE: This post was edited to change the accompanying photo.

Goldman Sachs, which shook up commodity markets two years ago with its prescient ’superspike’ theory that oil prices will top $100 a barrel, thinks it may be time for a short bout of profit-taking. 

After a 50 percent surge so far this year to $93 a barrel, crude is ripe for a temporary bout of “tactical” selling before resuming a climb that could take it into triple-digit territory, Goldman said. 

Gold and agriculture may also be ready for a little trim.

Goldman’s ’superspike’ theory says booming global demand for commodities will outpace new supply.

MasterCard SpendingPulse has been publishing weekly retail gasoline purchase data on a weekly basis since August in an effort to nail down actual American fuel consumption in a timely way.
 
Now it looks like the data could be used in predicting U.S. gasoline inventories as reported by the U.S. Energy Information Administration — a key headline for energy traders. The graph seems to show a negative correlation between SpendingPulse gasoline purchases and EIA gasoline inventories with two-week lag, though the relationship vanishes when U.S. refiners hit the brakes.

Two cold fronts have brought winds, waves and rain to Mexico’s Bay of Campeche, stopping the country’s crude oil exports and triggering an accident that left at least 21 offshore oil workers dead

The incidents propelled crude prices to a record high over $93 a barrel on Monday and highlighted the energy industry’s vulnerability to Mother Nature’s whims.