If political unrest in Libya spreads to other oil-rich countries and the ensuing chaos disrupts crude oil production, gas prices could hit $5 a gallon by peak summer driving season, industry analysts say.
Crude oil prices soared Monday and kept rising Tuesday, adding 7% to Friday’s closing price to trade around $96.25 a barrel for April delivery on the New York Mercantile Exchange as violence and a military crackdown spread in Libya, first major oil-producer hit by the burgeoning anti-government movement. The increased violence prompted BP and Norway’s Statoil to pull oil workers from the country.
“If this thing escalates and there’s a good chance that there’d be a shift in supplies, $5 gas isn’t out of the question,” says Darin Newsom, senior analyst at energy tracker DTN.
The average price of regular gasoline is expected to rise to $3.25 within a few days, says Tom Kloza, chief analyst at the Oil Price Information Service. That’s 2.5% above Tuesday’s $3.17 national average.
Gas prices are up 20% from levels a year ago but nearly 23% below the record $4.11 average set in July 2008.
While troubles in Libya and brewing unrest in the Middle East are fueling higher crude prices, other catalysts are driving gas prices. The U.S. economy, higher traditional consumption in spring and rising demand from China and other countries are likely to push gas to $3.75 to $4 a gallon by midsummer. Political upheaval in Saudi Arabia, Iran, Kuwait and the United Arab Emirates has energy markets braced for an even sharper run-up.
“If you are looking at the disruption of movement and production in countries such as Saudi Arabia and the UAE, you’re easily talking $5 gas,” says Peter Beutel, president of energy adviser Cameron Hanover. “We have all the wrong things working together at the right time: an economic recovery, (stocks) making new highs, a lower dollar, strong seasonal demand and unrest in the heart of oil production.”
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10 Responses
Its all speculation, what a bunch of nonsense. Oil speculation should be illegal unless you plan on taking physical hold or they should increase the requirements of speculators when they buy the futures contracts. Based on the old concept of supply and demand, oil should be pretty cheap now as supply is greater than it was last year and demand is down from last year.
1. There was a story yesterday about the obama regime having people take on many aliases so they could spout their liberal insanity as many “people.”. That being said are you really CharlieHall from the daily kook?
No. 2: If you are not the “Mark Levin” who rants on the radio, you are a curious source for an allegation that the Obama administration is engaging in deceptive practices to spread their point of view, i.e., in your words, “liberal insanity.”
I asked years ago, and I’ll ask again: are you the same “Mark Levin” who broadcasts in New York over WABC am radio?
our oil doesn’t come from Libya. why should our prices go up?
am I missing something here?
No one really knows, when oil was peaking every day in 08 people were predicting 200, 300 oil a barrel, when it was tanking in 09 people were predicting as low as $25 a barrel. No one can predict what the market will do in the short term.
No. 4: A simple answer to your first question, i.e., why should US prices go up, is: Our prices are going up because the folks who buy Libya’s oil – the supply of which is expected to decline – are now trying to buy the oil that the US buys, and suppliers of US oil sell to the highest bidder, not necessarily to the US.
The answer to your last question – never mind.
#2, instead of listening to right wing talk show hosts and using their talking points, why not be mechadesh your own?
$5 a gallon in NY…… $4 a gallon in NJ
#2 CharlieHall is a hard core liberal. I (CharlieSmall) on the other hand am a conservative.
$5 a gallon is a small price to pay to put this rasha out of business permanently.
(I am the real Charlie Hall.)