In a blow to drivers already struggling with high gasoline prices, BP (British Petroleum - world’s largest oil producer) was forced to shut about 8 percent of the nation's domestic oil production for what seems to be a period of weeks after discovering "unexpectedly severe corrosion" in its pipelines in Alaska.
U.S. light crude futures surged $2.13 to $76.89 a barrel on the New York Mercantile Exchange, back near record highs. Gasoline futures rose 3.35 cents to $2.2650 a gallon.
BP officials didn't say how long the field would be shut in for or how much it's estimated to cost to fix the problem. But in a conference call with reporters, BP America Chairman and President Bob Malone thanked the state agencies and other companies that would be working to fix the problem "in the weeks ahead."
When oil prices were low, they were reluctant to spend on that kind of maintenance, he said. But when prices soared in recent years, the cost of shutting down a pipeline or other facilities for maintenance would have meant too much lost production.
The incident comes at a key time for Alaska's oil industry, as the state considers a massive natural gas pipeline and the legislature debates an overhaul of state oil taxes meant to generate more revenue with prices high.
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