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Will gas climb to $5 a gallon?

Global events are putting upward pressure on oil prices, but there are other factors to consider. Here's another view.

By MSN Money Partner Jan 18, 2012 7:25PM

This post comes from Meg Handley at partner site U.S. News & World Report.

 

USNews.com on MSN MoneyBuzz about the possibility of gas costing $5 a gallon this summer caused quite a stir Tuesday, but could prices really spike that high come June?

 

Average gas prices hovered around $3.39 a gallon nationally Monday -- the highest January gas prices ever -- up 11 cents this month and almost 30 cents higher than last year's prices. That's still a long way off from the $4.11-a-gallon peak the nation saw in July 2008, but analysts point to a variety of economic pressures that could translate into painful prices at the pump. Post continues below.

For starters, tensions with Iran over its threats to close off the Strait of Hormuz have pushed crude oil prices up over the past several weeks, increasing costs for refiners and retailers who are further down the production and delivery stream.

 

With Tehran digging in its heels, the situation recalls some of the same supply issues the world had to deal with following the uprisings in Libya, which severely curtailed the country's production capacity and limited oil supply. The Strait of Hormuz is the world's most important oil transit chokepoint, according to the U.S. Energy Information Agency, shuttling in about 17 million barrels of oil per day, which amounts to about 20% of oil worldwide.

 

Also, with the U.S. seeing some glimmers of economic recovery, demand for gasoline has ramped up. U.S. demand coupled with other emerging markets is likely to keep prices elevated.

 

"We're forecasting a number approaching $4 (retail price) this summer," says Sarah Emerson, president of Energy Security Analysis. "That's still a high price. That's a painful price and people might say, 'Well, I'm not going to drive as much.'"

 

Still, $5-a-gallon gas probably isn't in the cards. European economies face a particularly hard economic year as they try to repair their balance sheets, and China's growth, while still good, is showing signs of slowing. Those factors could reduce demand for oil and ease price pressures.

 

"If the Iran story doesn't pan out and oil continues to flow unhindered, it's really hard to create those stories of $5 (gasoline)," Emerson says.

82Comments
Jan 19, 2012 11:12AM
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Whether people just don't realize it or want to admit it, this is the key to our economy. Think about when gas was around $1.25 per gallon, we didn't have any economic issues. Also, in 2008, when gas fell back under $2 per gallon, suddenly the economy was "improving." But that didn't last long. It's simple really, Let's say I have a 20 gallon tank. Before the price surge I could fill up my car for $22, now at $3.25 it cost $65. That's $43 a week ($172 per month) I can't use to buy groceries or spend at Walmart which hurts the economy.

Now put this burden on any transportation company...diesel prices are higher than gas prices. It now costs more to ship products so, in turn, transportation companies have to charge more. When the store pays more for shipping then they charge more for the product. So, now the groceries I was spending that extra $172 a month on have gone up too, making it even harder for me to buy groceries. So I have move money around to afford groceries...what suffers? the electric bill? the water bill? No...the mortgage. Anyone see any correlation here? Or am I the only person in America who has this figured out? Because I seem to be the only person who is talking about it.

 

Simply put, find a way to make gasoline under $2 again and the economy WILL recover...quickly.

Jan 19, 2012 11:44AM
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cheap gas puts more money in peoples pockets to spend on other things thereby boosting the economy.why dont they get this?dum bastards
Jan 19, 2012 11:27AM
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Did I miss something in this article? Let's read this again.....

"For starters, tensions with Iran over its threats to close off the Straights of Hormuz have pushed crude oil prices up over the past several weeks, increasing costs for refiners and retailers who are further down the production and delivery stream".

 

Ahh, threats to close off the Strait of Hormuz have pushed crude prices.....once again speculators are driving up prices based on something that might or not happen at all. Can anyone say GREED?

As long as our sorry ARS lawmakers allow this kind of B.S. continue to happen, nothing will change on Wall Street! Get rid of lobbyists and speculators and let's see what happens to our economy.

Jan 18, 2012 9:26PM
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The gasoline prices are the scam of the century!! 

 

Oil companies and Wall Street Speculators making billions of the backs of the American working class.

 

 

 

 

Jan 19, 2012 1:08AM
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I'm a farmer and use A LOT of fuel. Buying an electric car is NOT an option for me. I use 100-150 gallons of diesel a day, plus 10 plus gallons of gas. PLUS oil, grease, and other oil based products. If it hits 5 bucks a gallon, me and every other farmer and rancher is screwed.
Jan 19, 2012 4:04AM
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I believe our so called leaders is just trying to bring ruin to this country. Passing over 40,000 new laws, and refusing to drill for domestic oil when nows the time we really need it. We Americans need to wake up and realize this is our country, its government of the people, by the people and for the people. Meaning if we want domestic oil drilling, we should get domestic oil drilling. We are the governments employers, they are our employees, and like any job if the employee don't do it right then its the employers duty to fire and replace that employee. If not, well then that company will end up like this country.
Jan 19, 2012 2:23AM
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Our dumbernment is as dumb as a bag of hammers...Want to help the economy dumbas** in office? Get the price of gas back to 1.50 a gal! People will actually travel again. Stores will be able to lower prices because they won't be paying so much for deliveries...people would then be able to afford to buy other things instead of spending every $$ they make at the gas pump...un-flipping real how all these ivy league educated morons don't get this.

Jan 19, 2012 1:11AM
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Hey,  we're the United States. We are so smart that when oil is almost worthless we will have far more in the ground than everyone else. U.S. loses again. The U.S.A. is a lackey for the Saudis, we fight their wars, and grossly over pay for oil. We have all the resources and they have none. We are going broke and they are living like kings. The U. S. leads the world in stupidity. that's how smart we are. Now go to the mail box and get your food stamps and government check for doing nothing. Keep lowering your standard of living, because God knows it's better than working and earning your way. I'm 66 and really don't give a crap because I was blessed to have lived in a great country and work all my life. We were the best country in the world, now ugh...it sucks. Why?  There are more slackers who don't care about this country than producers who love and charish true freedom. Keep the borders open. the more non-Americans the better. They don't need ID to vote, car insurance, hell they don't need anything. they are non-Americans and they run the country. $5.00 gas?  Doesn't it sound like a small problem now.
Jan 19, 2012 9:08AM
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So this guy says "Wall Street sets the price". They admit it openly. Nothing to do with Supply and Demand anymore. It'll go up because it can and no one will do a thing about it. Someone just needs to grow some nads and "Lock it Down" like Reagan. Its just all greed causing everyone hardship. Just Economic Terrorism is all it is. Worse than the Taliban or Religious fanatics. Why would all the terrorist worry about bringing down the USA when they know that America and its handful of greedy business men will do it for them and all from the inside.

So yea they'll try to push it up to $5, because they can get away with it. NOT because any shortage or interruption.

Jan 19, 2012 1:22PM
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The problem is not that gas has gone up 250% in 11 years. The problem is I make less money than I did then.
Jan 19, 2012 1:17PM
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Obama postponed the pipeline decision until after the election. The man has no xxxx. We need a strong leader who will either have the guts to push through projects which are in the best interest of the country or have the intestinal fortitude to stop projects for valid reasons.

 

Given today's politically correct environment it would be impossible to ever build the Hoover Dam or fill in a swamp to build Manhattan or parts of Boston. Could you imagine the lawsuits that would result in trying to build a new railroad across the country? How about building a new refinery? A good leader knows that there are costs associated for every project undertaken or denied. Our President must do what is best for the country!

Jan 19, 2012 9:01AM
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Well, last time it got up over $4.00 it increased the price of

everything in our lives...? food was the first to increase...

Then anything involving transportation went up...

Guess what, fuel  price came down, but all other prices remained up, so go figure ..?

Think $5.00 per gal. was what obamo was looking for...

Jan 18, 2012 11:16PM
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gas PRICES are too high now. Let the drilling begin, we haveplenty of easy to reach oil.
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and as long as people like you make excuses for the oil companies they will keep going up . look at their profit now and tell me they aren't raping us and most of it with oiloff our lands . tax them for all they make over a set profit and this will stop . ceo's making millions is out of control . none of them are worth it .

 

Jan 19, 2012 11:31AM
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Hey, I have an idea!  Lets build a pipeline from Canada to Texas to refine sand oil.  That will bring down the price. Right?  This article is posted the day after the POTUS shot down big oil's (I mean congress) attempt to rail road Americans with a shotgun public venture.  Hell, call your Senator and tell them we want that pipeline to come through and reduce our burden.  It's not like they will refine and ship elsewhere would they?  In a global economy with multinational corporations, the most profitable path is key.  And America is no longer profitable.

Shame on MSN for such unfiltered reporting.  

I'll continue to say this "It's not what is on the surface which will kill you. It is the shark below."

Jan 19, 2012 12:30AM
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EVERY year at about this time there is always multiple excuses why gas will most definitely go north in price.It appears that the media primes this fire, as if they reap benefits from the massive profits these scumbags take in. And by drawing more and more attention to this, the price is set as to where it will go(similar to insider trading and price fixing). But as usual everyone whines alot, the politicians stay unusually quite, WITH FEW EXCEPTIONS, the call is for alternative energy, and the powers that be blow smoke up the American peoples asses as everyones wallets shrink except those reaping the benefits of gouging. While opec themselves are a big part of this, our own oil CEO,S AND  executives further insult this country by reaping in astronomical PROFITS , bonuses and salaries during these times. INTRIGUING IS THE FACT  that there is no accountability, and the congressional hearings that will again take place are ASSMOKE also.Congress leaves these meetings to a dinner and a gala affair attended by the same smoke blowers they allegedly are trying to investigate.
Jan 18, 2012 9:17PM
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Maybe if gasoline was not the country's #1 export in December, it would be lower. Lets not even get started on the Keystone pipeline decision. Bottom line; liberals want to pretend that we don't need gas, and the conservatives are the bitchees of big oil.
Jan 18, 2012 9:09PM
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The price of gas right now in SoCal isn't far off of $5.00 a gal.  The gas here is well above the national average.  The price of fuel & gasoline is a direct contributor to the NON recovery that is going on in this state.  People working just to be able to buy gas to go to work.  Crazy just crazy!

I don't have the answer for this problem but sure wish I did.  Big oil has there hands all over alternative fuels as well so they can gouge us there as well!

Jan 19, 2012 9:12AM
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Of course, these liberal progressives desire to see our great country as a weak third-world entity that they can control. They quickly been doing everything possible to make as many people dependent upon the government and in bondage to this institution for their existence. Allowing gas prices to rise to the highest levels possible is just another part of this Marxist plan. Every individual with the least amount of intellect knows we have enough energy to last for decades but the government will not allow us to process the oil, natural gas and coal we have abundant quantities of but everyday allows to become weaker and weaker just like our weak president and his socialist/Marxist cronies in both branches of congress from both parties. Wake up America before our country is destroyed from within by these power hungry unpatriotic and socialist thugs.
Jan 19, 2012 2:39PM
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Our president is being permissive of rising gas prices. He has no feeling for the person that has to drive 15 miles one way to a minimum wage job with a beat up old car (because that is all the person can afford) and spend 50 % of his/her paycheck on gas---no wonder no one cares to go to work---if there is any work--just another of our presidents fumbles. This stuff has nothing to do with the iranians closing anything it has to do with a president that doesn't care about common people and it doesn't matter what color you happen to be. Vote wisely folks or there will be more of the same to come.
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