The price of oil is poised for another run at $100 a barrel after a global economic rebound sent it surging 34 percent since May. That could push gasoline prices to $4 a gallon by summer in some parts of the country, experts say.Yes, and unlike when prices surged a couple of years ago we won't have Bush to blame for it. Or will we?
Flying, shipping a package and ordering a pizza all likely would get more expensive in the new year if that happens and companies pass along higher energy costs. Some economists say rising energy prices will slow economic growth.
The U.S. is the world's largest oil consumer, but prices since spring have been on a roll primarily because of rising demand in developing countries, especially China. China's oil consumption is expected to rise 5 percent next year; that compares with less than 1 percent growth forecast for the U.S.
Benchmark oil for February delivery rose $1.54 on Friday to end the year at $91.38 per barrel on the New York Mercantile Exchange. It reached $92.06 earlier in the day, the highest since Oct. 6, 2008. Nationwide gasoline pump prices now average $3.072 per gallon.
Gasoline expert Fred Rozell predicts that 15 states -- including Alaska, Hawaii, Connecticut and Rhode Island -- will see gasoline prices top $4 a gallon by Memorial Day. "A dollar more per gallon isn't that much -- probably about $750 more per year for each motorist, but there's a psychological aspect to gas prices," he said. "People are going to be up in arms about this."
Four bucks a gallon might soon seem like a bargain.
Oil is again a favorite of big speculators seeking quick return on their bets against a weaker dollar. Energy analysts predict crude will hit $100 a barrel early in the year and stay there, causing concern for indebted consumers.
"Consumers can't really handle $100 crude," said energy analyst Peter Beutel of Cameron Hanover.
What hurts is that each 20-cent jump at the gas pump due to higher crude means consumers have to pump $100 million a day into their tanks instead of spending it elsewhere. At $6 a gallon, that jump would amount to an added $1 billion a day.