Oil prices continue to rise as Saudis target $80 per barrel, could climb from there
As summertime approaches, so do rising fuel prices. This time around, the price hikes are tied to rising world oil prices. When gas prices dropped from peaks of over $4 per gallon last summer to under $2 at the end of the year, world-wide demand reductions resulting from the financial collapse were to blame. Oil traders now seem to think that the economy will be recovering in the coming months, and have been bidding up prices in recent months. This week prices have $63 per barrel and Saudi Arabian Oil Minister Ali al-Naimi thinks the economy can sustain prices at $75-80 and expects prices to hit that level by the end of the year.
OPEC is expected to hold production steady for now in an attempt to keep prices up. Saudi Arabia wants prices up to fund development of new production, while Venezuela wants higher prices to pay for President Hugo Chavez's aggressive social programs.
With the aggressive new CO2 emissions standards announced by President Obama last week, higher prices will definitely help drive demand for more efficient vehicles. The problem is that if prices are too high before the economy picks up again, the current situation - where no one is buying any vehicles at all - will continue. As for the long-term, a new study predicts that prices will hit $110 per barrel in 2015 and then maybe $200 per barrel in 2030.
[Source: Reuters, Green Car Advisor]
Reader Comments (Page 1 of 1)
Kumar 3:09PM (5/28/2009)
"The problem is that if prices are too high before the economy picks up again, the current situation - where no one is buying any vehicles at all - will continue."
Well, the market already too care of the companies without enough efficient cars in their lineups. If you're not bringing efficient cars or planning to bring them to market, you deserve to be out of business.
Besides, aren't we still debating the merits of raising the gas tax so more of the price of a gallon stays in the US instead of heading overseas? If we beat OPEC to the punch, then they won't be able to manipulate the end price as much. ;)
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Ghen 4:19PM (5/28/2009)
We, the somewhat educated general public, are still debating it sure.. But to politicians its suicide. They just can't let go of the stupid people vote.
Marshall 3:13PM (6/02/2009)
wooHOO! Gotta keep those prices high to keep the efficient technology rolling forward while making gas guzzlers unappealing. May oil never dip below $80 again! Thank you my Wahabi oil barons and friends.
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Luke 3:54PM (5/28/2009)
Actually, there is a huge oil glut of about 2 million barrels a day, even with the cuts in production. The price of oil is being driven up by speculation. OPEC need not pat itself on the back.
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polo 4:05PM (5/28/2009)
Stop trying to associate all price increases with arabs. The real culprits are speculative trading in the futures market. Demand is historically low right now, and reserves are historically high. Speculative trading has absolutely destroyed the connection between price and demand in the oil markets. Last year Obama pointed this out in a way that shows he knows exactly whats going on....I'm still waiting on that bill to ban this kind of activity.
Also right now the energy markets are a huuuuge bubble, and alot of hedge funds are going to collapse when it pops in a few years. People would be wise to check where their retirement $$ is being allocated.
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Mike!!ekiM 7:42PM (5/28/2009)
The problem may also be oil is a commodity, and people worried about US Dollar inflation may be searching for a way to park some money and have it appreciate.
But, for us in the car field, we really really need cars with plugs. That's the ONLY TRUE protection for fuel price spikes, and possible availability problems. Cars with plugs are the TRUE hybrids.
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majortom1981 9:16AM (5/29/2009)
Can we make gas $6 a gallon ? Please?I am tired of all these huge SUVS that only have one person in them. (not towing anything either)
Atleast if they are in smaller cars they will be less of a dnager to everybody else.
I have a corolla that I only have to pump 8 gallons everytime.
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SkiD666 9:33AM (5/29/2009)
$200 a barrel in 2030, oh god no, what will we do?
Doom and gloom from the media to scare normal people.
Maybe people should consider the fact that 20 years of inflation will double the price of oil anyways. Maybe the study should have predicted $300 or $400 a barrel price.
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Mike 10:49AM (5/30/2009)
it is not that oil is going up, it is the dollar going down. gold is up $100 in the last month or so. the dollar index is below 80. everything, even electric cars, will be more expensive in the near future thanks to all the spending.
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mimi 10:17PM (7/17/2009)
Best thing to do is try to get a job close to home, and buy a car that is really fuel efficient. Unfortunately things might have to change in America for the worse, we might have to go back to the old ways for transportation and jobs. People used to live closer to their jobs and cut back on clothes, food, and whatever they had to cut back on to save money. I think we might be in for some tough times ahead, so it's best to be prepared for the storm. I think America should start to get more creative and start to create more jobs by getting groups together in their homes, churches or wherever they want to meet and try to come up with inventive ideas on how to start their own business or whatever they want to do with their lives to make a living. Large corporations and successful businesses usually started out in their own homes. Look at Bill Gates!
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