Oil price 'threatens US economy'

High oil prices push up the cost of energy and petrol

Sustained oil prices close to $80 a barrel could hit US economic growth, Energy Secretary Sam Bodman has said.

The US economy has never faced such high prices for "an extended period," Mr Bodman warned.

There is concern about whether oil supplies can meet global demand and Mr Bodman urged oil producing nations to increase output to avoid shortages.

Oil prices have fallen back slightly after hitting a record intraday high of $78.77 a barrel on Wednesday.

Sustainability fears

Analysts say that a price rise above $80 is inevitable, raising concerns about the effect of energy costs on inflation.

Higher oil prices drive up the costs for businesses who pass those increases on to customers. And with the price of petrol at the pump close to $3 a gallon, it is feared that higher fuel bills will begin to dent consumer spending.

Mr Bodman said that the high oil prices had inflicted only a "modest" impact on the economy but he was unsure that this was sustainable.

"I am concerned that where we are operating, in the ranges that we're talking about now," Mr Bodman said.

"I am concerned for each uptick (in price)."

And he called on the oil producers cartel Opec to "look carefully at the facts".

However Qatar's Oil Minister Abdullah al-Attiyah said that Opec could do little about the high price of oil and that there was no shortage of crude in the market.

On Thursday US light sweet crude settled up 33 cents at $76.86 a barrel while in London Brent crude rose 41 cents to $75.76.

Before Wednesday's record high, the previous $78.40 high was recorded during the Israel-Lebanon conflict last year.