$4 for a gallon of gas in 2008?
Oil traded at over $90 Friday and the market took a tumble. It's gone "down" to the mid- and upper-80s since then. When will these prices start to effect the cost of gas at the pump? We can expect 20 more cents to the price of a gallon by mid- to late-November says Sarah Emerson, director of petroleum at Energy Security Analysis Inc. Stephen Schork, principal of The Schork Report, says "$4 gasoline is a near certainty in New York and many other areas of the country in the spring if crude prices stay at current levels." For all those people that like to say, well if you adjust for inflation... guess what? We are actually trading above those prices right now. According to Newsday, the price of a barrel of oil "surpassed the inflation-adjusted record for crude used in the United States, set in March 1981. The actual price then was $34.78 a barrel but the U.S. Department of Energy says that equates to $84.73 in today's dollars." Thanks for bumming me out, Newsday.[Source: Newsday]
Reader Comments (Page 1 of 1)
Kardax 4:09PM (10/22/2007)
Middle east turmoil is having an effect, sure, but fundamentals are coming into play more than people realize.
When oil prices are high and gas prices aren't following, oil refiners can actually start losing money. This appears to be the case today; I'm expecting the big refining companies to post lower profits for the last quarter. The effect is they're going to slow production, causing a build in crude oil stockpiles (lowering the oil price per barrel), and raising gas prices.
They other thing they're already doing is investing in new equipment to get more gasoline out of every barrel. This will come at the expense of international shipping, which uses leftover "heavy fuel oil" to move goods overseas. Since just about everything besides food comes from China these days, I expect some pretty substantial inflation over the next few years.
Reply
MikeW 5:42PM (10/22/2007)
How about we start pushing a larger percent of the oil coming from alaska to the middle 48, instead of exporting it.
Reply
rgseidl 7:51PM (10/22/2007)
Not sure what you're bummed out about, Lascelles. If the price of oil were $30/barrel, ABG would fold very quickly and you would be out of a job.
Fact is, sustained high fuel prices are the only way US consumers are going to demand high MPG vehicles and the cost/performance trade-offs that come with that. Higher fuel taxes would be a good insurance policy to keep that demand high but unfortunately, it seems highly unlikely that Congress will pass the requisite laws.
Reply
Lascelles Linton 8:07PM (10/22/2007)
Rgseidl, I can't speak for other greens but if you pin me down on the subject, I will be really bummed when energy is not free anymore. Greens don't say this enough, yes, we might destroy the planet
but you must admit, being alive at the peak of modern day Rome is pretty cool :D
Reply
Bill 5:15PM (10/23/2007)
Except since consumer demand drives 70% of the U.S. economy, any slowdown or recession kills commodity demand, including oil.
We haven't had a deep recession since Reagan's first term.
Consumers have shown themselves willing to stop spending and retrench when threatened - the tap shuts off quickly.
Reply
charles 6:30AM (10/27/2007)
Oil at 90 plus per barrel means oil shale is going to happen rapidly. Thank God, Kerogen from oil shale is the best premium feedstock to make "Low Emission Diesel". Now that the environmentalists have won the nobel prize for pointing out the problem of Global Warming, fossil fuel enthusiasts are next as they point out that the very best green house gas solution possible is from conservation (which is the equivalent of mileage). Mileage, my friends, is best achieved by Low Emission Diesel. Green Oil Shale, anyone?
Reply
Lascelles Linton 6:32AM (10/27/2007)
Charles, It takes time to invest in a plant or way of getting to the oil and most people think the price could fall from current levels quickly. I think I read coal to gas or something like that makes sense at $30-50 oil and they don't see investment. That's why I support something like a tax that would put a base in the price of oil.
Reply