Driven by dwindling U.S. gasoline supplies and rumors about production increases by Iran in the face of a possible Russia-Saudi Arabia alliance, crude oil prices continue their wobbly rise. Oil at $50 a barrel means that $3 a gallon gas is not far away, at least in much of America.
Crude rushed to just shy of $50 recently, not far from its 52-week high of $54.34. If that pulls back quickly, gas prices may be affected very little, but problems in Venezuela and Nigeria make high prices a good bet.
OilPrice.com recent ran this headline: An OPEC Production Freeze Could See Oil Prices Rise to $60. The background data support it.
The average price of gas is already $2.74 a gallon, and in some U.S. cities it is above $3. Prices are nearly that high in Washington and Oregon. Gas taxes in some of these states are particularly high and will not drop. If anything, legislatures are agitating to raise them to repair highways in terrible condition. The gas tax in California is very high among the states at $0.4062 per gallon.
Dan White of Moody’s recently commented to MarketWatch:
If prices go above the Moody’s forecast by Nov. 8? “It’s difficult to give an exact price given that prices would have to move in tandem with the approval rating, but generally they would have to be back near the $3 per gallon range for the model to swing to a Republican outcome,” White told MarketWatch. He said such a level “isn’t outside the realm of feasible possibility.”
The candidates have to worry about $3 gas. The consumer has to worry more.