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Assault at gas pumps related to attacks on Nigerian pipelines

  • Story Highlights
  • Nigeria accounts for one of every 10 barrels of oil that arrives in the United States
  • Exxon and Shell are extracting 2 million barrels of oil a day in Nigeria
  • The disruptions in Nigeria began around the beginning of 2006
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From Christian Purefoy
CNN
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LAGOS, Nigeria (CNN) -- Violence in oil-rich southern Nigeria is having a ripple effect thousands of miles away -- at gas stations in the United States.

One reason for record high gas prices, analysts say, is a spate of attacks on oil pipelines in Nigeria, the fourth largest supplier of oil to the United States.

The attacks are relatively small, but the fallout is substantial.

The average price of a gallon of gas in the United States climbed to $3.831 on Thursday -- the 16th consecutive day of a price increase and the 15th consecutive record high, according to AAA.

While analysts cite various factors in various countries for the increases, the price could keep going up with more attacks on pipelines in Nigeria, which accounts for one of every 10 barrels of oil that arrives in the United States.

"Anytime a pipeline is affected, anytime any production gets shut down, you see oil prices jump up one or two dollars a barrel just because there is no slack in the system," said Jim LeCamp, a senior vice president with RBC Wealth Management, which manages assets for wealthy clients worldwide.

Exxon and Shell are two of several companies that had been extracting 2 million barrels of oil a day in Nigeria. Yet a rebel group's attacks on oil pipelines in the Niger Delta have cut overall production by roughly 10 percent -- meaning 200,000 fewer barrels of oil on some days.

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That decrease in production comes at a time of increased demand from oil-hungry regions such as China, Russia and Latin America.

"Anytime there's a disruption there, it really affects the system," LeCamp said.

The disruptions in Nigeria began around the beginning of 2006, when the Movement for the Emancipation for the Niger Delta started to target foreign oil companies.

The rebel group hopes to secure a greater share of oil wealth for people in the Niger Delta, where more than 70 percent of the population lives on less than a dollar a day.

The group -- known by its acronym, MEND -- has bombed pipelines and kidnapped hundreds of foreign oil workers, typically releasing them unharmed, sometimes after receiving a ransom payment.

MEND wrote President Bush last month to admit that it attacked two oil pipelines -- and to ask former President Carter to mediate its dispute with the central government over the distribution of oil wealth.

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"The ripple effect of this attack will touch your economy and people one way or the other, and (we) hope we now have your attention," the letter said.

The Nigerian government has proposed a peace summit to find a solution to the region's problems, but an immediate resolution does not appear in sight.

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