As we approach the one-year anniversary of $4 gas, once again prices at the pumps are on the rise. In the past week, the national average price for regular gasoline surged more than 16 cents to $2.24 per gallon. That’s mild compared to last year’s push up and over $4—where it remained for a six-week period before taking a tumble.
So, what do experts make of the current run at the pumps, and the jump in price of a barrel of oil to $60?
The San Francisco Chronicle’s David R. Baker reports that surplus oil supplies will not allow the price of oil to climb much more. “While [experts] say oil could rise to as high as $70 per barrel in the near future, others argue that the world has too much oil right now for such high prices to stick.”
Mark Williams, Associated Press’s Energy writer, agrees. Williams writes, “Many think prices have only about another nickel to go before topping out.” The difference this time, according to Williams, is high levels of crude and gasoline in storage. “The country has not seen storage levels this high since Saddam Hussein invaded Kuwait in 1990.”
Michael Oneal of the Chicago Tribune adds that the bad economy will keep prices down. He reports that “additional increases will likely be moderated by the nation’s continued economic doldrums.”
Hybrid as Insurance Policy
On the other hand, Spencer Swartz, blogging for the Wall Street Journal, points to experts who believe there’s more room for prices to go. “Oil bulls see signs of demand recovery everywhere: Lower-than-expected inventory builds in the U.S.; less-awful-than-expected jobless numbers; record Chinese car sales in April. Top that off with OPEC’s continued efforts to fully cut oil production, even as non-OPEC countries watch their production too, and oil bulls think $70 oil is a real possibility.”
Steve McDonald at ContrarianProfits.com, sees a potential double-whammy when you add OPEC cuts to a recovering economy. “It is conceivable that if any really significant positive information about the health of our economy, or any other key world player’s economy, were to be released we could see a run well beyond our near term price of $75.”
While it’s a fool’s game to try to predict oil prices (especially beyond 2009), car owners who don’t want to be subject to the ups and downs of the market are well advised to drive a car that goes as far as possible on a gallon of gas.