August 31, 2005 4:45 PM, EDT

Crude Prices Slide, Gasoline Spikes Toward $3 a Gallon

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rude oil prices slid Wednesday following reports that the Department of Energy approved tapping the Strategic Petroleum Reserve in the wake of Hurricane Katrina, news services reported.

Benchmark light sweet crude oil futures fell to close at $68.81 on the New York Mercantile following two days in which prices surged past $70 for the first time, Bloomberg reported.

Gasoline wholesale futures continued to rise, jumping 13% on the Nymex, and retail pump prices reached $3 a gallon for regular unleaded retail in several regions of the country, including the Midwest and Mid-Atlantic states, according to newspaper and television Web sites.

Gasoline’s latest national average retail price as measured by DOE on Monday was $2.61, while diesel’s was $2.59. (Click here for previous coverage.)

eanwhile, DOE said in its weekly inventory report Wednesday that crude oil and gasoline inventories fell, while distillates, which include diesel and jet fuel rose.

Crude stocks fell by 1.52 million barrels, while gasoline fell 508,000 barrels. Distillates improved by 2.75 million barrels, DOE said.

Reuters reported that 20 oil rigs in the Gulf of Mexico were either missing or had sunk, following the hurricane.