Oil, just $75 a barrel two months ago, rocket past $90 which raises the specter of $3 a gallon gasoline for at least the next two months.
The factors which have driven prices higher are not likely to go away and may get worse: the value of the dollar, Chinese crude consumption, and the chance of a very cold winter in the northern hemisphere.
The American Petroleum Institute recently said that stockpiles will likely continue to fall in the US.
As was true in 2008, speculators who anticipate a drop in supply and a possible drop in supply from OPEC could push prices much, much higher. OPEC ministers say that their nations cannot make money unless crude is well above $70. They may use the current spike to refill their treasuries which were depleted when crude fell below $40 early this year.
Due to the rise, the traffic on the nation’s roads may be a little light this Christmas. Gasoline prices have spiked up and are well above $3 on the east and west coasts.
The average price for regular gasoline at U.S. filling stations rose 3.92 cents to $2.9121 a gallon,the Lundberg survey reported according to Bloomberg. “What we’re seeing is really just the tip of the iceberg,” Trilby Lundberg told the news service today in a telephone interview. “At the retail level, we could see another six to eight more cents” per gallon as refiners pass through higher crude costs.
People who normally get a piece of coal in their stockings will get a gallon of gas this year instead.
Douglas A. McIntyre