Oil prices jump to new high for the year

By DIRK LAMMERS

Oil prices hit a new high for the year Wednesday ahead of a government report on the levels of crude in storage that have neared 19-year highs recently.

Benchmark crude for June delivery rose $1.42 cents to $55.26 a barrel on the New York Mercantile Exchange, levels not seen since November.

Weekly inventory data from the Energy Information Administration is due later Wednesday morning, but an overnight report from the American Petroleum Institute showed a 1-million-barrel slip in crude oil stocks and a 2.9-million-barrel drop in gas supplies.

"A sign that demand is improving perhaps? Or maybe those refiners are still indifferent to increasing supply," Phil Flynn, an analyst at Alaron Trading Corp., wrote in a morning note. "It was probably a little of both."

Meanwhile, the national retail average price for a gallon jumped more than 3 cents overnight to $2.11 a gallon, according to auto club AAA, the Oil Price Information Service and Wright Express. That is about 7 cents a gallon below what it was a month ago, but $1.50 below its year-ago price.

Analysts expect the EIA to report a build of 2.2 million barrels of oil for the week ended May 1, according to a survey by Platts, the energy information arm of McGraw-Hill Cos.

Crude stocks rose 4.1 million barrels last week and are at "the highest level of inventory since the month following Saddam's August 1990 invasion of Kuwait," analyst and trader Stephen Schork wrote in his daily report.

On Tuesday, Fed Chairman Ben Bernanke gave his most optimistic prediction yet about the end of the U.S. recession, saying he expects the economy to start growing again this year.

Bernanke cited firmer home sales, a revival in consumer spending and some improvement in lending conditions for banks, businesses and individual borrowers.

U.S. bank stress test results set for release on Thursday and April unemployment figures due out Friday should provide more insight into the state of the economy and the odds that energy prices will increase.

Oil has traded near $50 a barrel for more than a month after dropping from a record $147 last July and rising from below $35 in February.

In other Nymex trading, gasoline for June delivery rose 3.9 cents to $1.611 a gallon and heating oil gained about 3 cents to $1.456 a gallon. Natural gas for June delivery was up 15.4 cents to $3.769 per 1,000 cubic feet.

In London, Brent prices rose $1.11 to $55.23 a barrel on the ICE Futures exchange.

Associated Press Writers Pablo Gorondi in Budapest, Hungary, Alex Kennedy in Singapore and Pan Pylas in London contributed to this report.




Ford invests $550M to bring new Focus to market

The Associated Press

Ford Motor Co. says it will spend $550 million to convert its old Michigan Truck Plant into a facility that will build small compact modern cars.

The retooled facility, which once built sport utility vehicles like the Lincoln Navigator, will now build Ford's next-generation Focus, expected to roll off the line next year.

The plant will also build a new battery-electric version of the Focus for the North American market.

The struggling automaker says roughly 3,200 jobs will be created in Michigan because of the plant conversion.

Ford says it will also consolidate operations at its Wayne Assembly plant and transform two other truck and SUV plants as part of the retooling.





Atchison plant to close in July

A Florida-based maker of promotional products will close its Atchison, Kan., plant, eliminating 88 jobs.

BIC Graphic USA said the closing will be completed by July 10. All full-time employees will receive severance packages, according to the company.

Based in Clearwater, Fla., BIC Graphic acquired the Kansas plant in 2007, when it was known as Atchison Products. The Atchison plant makes customized garment bags, padfolios and can coolers.

The company is considering a proposal by the Atchison employees to continue operating under a subcontracting agreement. A decision will be made by May 15, according to BIC Graphic.





Schwarzenegger says it's time to study legalizing pot

By Kevin Yamamura

SACRAMENTO — As California struggles to find cash, Gov. Arnold Schwarzenegger said Tuesday it's time to study whether to legalize and tax marijuana for recreational use.

The Republican governor did not support legalization – and the federal government still bans marijuana use – but advocates hailed the fact that Schwarzenegger endorsed studying a once-taboo political subject.

"Well, I think it's not time for (legalization), but I think it's time for a debate," Schwarzenegger said. "I think all of those ideas of creating extra revenues, I'm always for an open debate on it. And I think we ought to study very carefully what other countries are doing that have legalized marijuana and other drugs, what effect did it have on those countries?"

Schwarzenegger was at a fire safety event in Davis when he answered a question about a recent Field Poll showing 56 percent of registered voters support legalizing and taxing marijuana to raise revenue for cash-strapped California. Voters in 1996 authorized marijuana for medical purposes.

Assemblyman Tom Ammiano, D-San Francisco, has written legislation to allow the legal sale of marijuana to adults 21 years and older for recreational use. His Assembly Bill 390 would charge cannabis wholesalers initial and annual flat fees, while retailers would pay $50 per ounce to the state.

The proposal would ban cannabis near schools and prohibit smoking marijuana in public places.

Marijuana legalization would raise an estimated $1.34 billion annually in tax revenue, according to a February estimate by the Board of Equalization. That amount could be offset by a reduction in cigarette or alcohol sales if consumers use marijuana as a substitute.