Oil prices drop as Mubarak leaves Cairo

New York - Oil prices dropped on Friday after Egypt's President Hosni Mubarak handed over power to the military and left Cairo.

Benchmark crude for March delivery fell $1.21 to $85.52 in midday trading on the New York Mercantile Exchange. Traders and investors have been concerned that anti-government protests in Egypt over the past 18 days could spread to other parts of the Middle East and disrupt oil supplies. Now that Mubarak has stepped down, the military says it will oversee a democratic transition to a new government.

Closer to home, U.S gasoline prices are the highest ever for this time of year. Since Jan. 1, pump prices have averaged well above $3 per gallon. They hit $3.127 per gallon Friday, 3.4 cents higher than the same time last month and 49.1 cents more than a year ago, according to auto club AAA, Wright Express and Oil Price Information Service.

The dramatic jump brings back memories of three years ago, when pump prices rose above $4 a gallon, forcing many drivers to join car pools and trade in gas-guzzling SUVs for more fuel-efficient cars. But "it would be a mistake to think we're going to have that all over again," OPIS chief oil analyst Tom Kloza said.

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