Hello, I'm Mark Pearson. Despite sweltering temperatures, U.S. consumers got their groove back last month. According to the Commerce Department, retail sales, which account for the lion's share of all economic activity, rose by a healthy 1.4 percent in July -- their largest gain in the past six months. Meanwhile, in a development that will be welcomed by consumers, the Federal Reserve hit the pause button this week on the longest unbroken string of interest rate hikes in recent history. And crude oil prices rose briefly early in the week on news that a damaged pipeline in Alaska would force the BP oil company to close its largest American oil field. On Friday, BP officials were considering reopening part of the pipeline, but it may be weeks until production levels return to normal.
With BP's Prudhoe Bay oil pipeline down for repairs, supply to West Coast refineries is predicted to drop by up to 400,000 barrels per day for a few months. Despite the reduction, a U.S. Department of Energy report released this month shows there is enough surplus to supply 500 million barrels per day. If the surplus is reduced through increased consumption, DOE experts claim West Coast refineries could process all types of crude oil and supply could be diverted from other sources to fill the gap.
With the oil industry already trying to recover lost production from required maintenance and natural disasters, the closure of BP's Alaskan pipeline made prices on the oil market jump higher. Once supply issues were sorted out prices moderated and trended lower at the end of the week.
It is estimated that United States drivers consume 140 billion gallons of gasoline a year. The average price for a gallon of regular unleaded fuel in the U.S. has rolled over $3 and isn't expected to drop below this amount anytime soon.
In an attempt to find ways to reduce America's oil addiction USDA has been pumping money into alternative energy projects. This week, U.S. Agriculture Secretary Mike Johanns released some of the funds by announcing $9 million dollars in loan guarantees and grants to renewable energy and energy efficiency projects.
Between 2001 and 2005, the USDA dolled out almost $1.7 billion and is expected to spend an additional $270 million in 2006.