PETROLEUM Average retail price of gas tops $2; OPEC discusses raising production

OPEC discussions about production are irrelevant,an economist said.
LONDON (AP) -- Oil prices surged to near $42 a barrel and the U.S. Energy Department said the country's average retail price of a gallon of gasoline had passed $2 for the first time.
Oil prices rose Monday as markets shrugged off a Saudi proposal that OPEC raise its official output target by 6 percent.
Analysts argued that the Organization of Petroleum Exporting Countries must add real barrels of oil to world supplies, rather than just increase the target, if it expects to curb the relentless rise in crude prices.
A senior OPEC delegate, speaking on condition of anonymity, said the group was so worried about overheated prices that it might consider making a larger increase in its target than Saudi Arabia initially suggested last week.
OPEC, which supplies one-third of the world's oil, plans emergency talks this weekend in Amsterdam to discuss a possible target increase of 1.5 million barrels. Because OPEC already exceeds its current target by more than this amount, analysts say such a move would only legitimize some of OPEC's overproduction and do nothing to trim prices.
"It's not that it won't be enough. It's irrelevant," said Leo Drollas, chief economist of the Center for Global Energy Studies in London.
Record price of oil
Futures contracts of U.S. light crude for June delivery reached $41.85 a barrel in New York, before retreating to $41.55, up 17 cents from Friday's close. It was a new record close on the New York Mercantile Exchange. In London, July contracts of North Sea Brent reached $38.50 a barrel on the International Petroleum Exchange, but were up just 4 cents by evening at $37.90.
In its weekly report of retail gasoline prices, issued Monday, the Energy Department said Americans paid an average price of $2.017 per gallon, up 7.6 cents from the previous week. That was the first time the national average topped $2, the agency said.
Pressure is building on OPEC to dip into some of its spare production capacity to boost actual output -- not just its target. Markets are stretched by unexpectedly strong demand and spooked by turmoil in Iraq and uncertainty elsewhere in the oil-rich Middle East.