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.
This post comes from Meg Handley at partner site U.S. News & World Report.
Buzz 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.
They said in an article earlier that if they did close the delivery path that Saudi Arabia could (IF THEY WANTED TO COMMIT TO...) replace any oil Iran would ever produce in a nano-second and they wouldn't need them. Also, they said the percentage Iran actually produced in comparison to the other producers wasn't even a large percentage. Now all the sudden it's causing speculators to speculate?
AGREED THIS IS ALL...UH-GREED!! They all get to laugh all the way to the bank. Gonna suck when we can't afford to go to work .
The price of gas usually goes up before an election.... depending on who is running for president. With big business/oil companies maintaining the record profits that began right when Katrina struck, they have the option of controlling prices to a large extent to favor one or the other candidates. If a candidate favoring big business is faltering, my guess is that there will be a sudden manufactured crisis where prices rise. And don't you know that the only thing that will lower prices will be further deregulation.
People please....
Gas costs 78 cents a gallon to manufacture, and that is also due to emissions and blah blah blah... Greed is the ONLY reason gas is what it is now. As long as you will pay it, they will keep on keeping on....
take all the folks responsible for unfair pricing, march them into a public square and start executing them... i promise you by the third one that pricing will plumet....
Big oil, big lies= big profit. Oh btw, 100mpg has been around since the 1950's... WAKE UP
Another nail in the oboma coffin, with the price of oil going up weekly and the earnings of the people in the U.S. don't .We the people are not going to put up with much more.
The people in washington could care less about us,all they care about is there jobs.
They protect the land so we can go see it but nobody can afford the gas to go.
Get the HELL out of the world market we can do it with out Iran and the rest of the people who are never going to quit fighting.We have oil canada oil mexico has oil.Quit selling our oil overseas keep it here in the U.S.
Washington your killing us STOP IT.
Come on America !! We need an alturnative fuel source We must go to work and find a new way to fuel our cars and to fuel our factories and generate electricity. We can do this!!! We have
been to the moon, We Descovered and developed nucular Energy and We have invented 90%
of the things this modern world has in it. now its time to find a way to solve this energy problem. We have the resources and the minds and the drive to do this! Lets get "r" done.
Right now we have the means to bridge the gap by useing natural gas, solar power, and wind power and nucular energy. but WE CAN DO THIS!!! We can find a brand new energy source that will never run out and is affordable to run this nation and show the world once again America is no 1 and the leader in inventing and solving problems that seem impossable. Its right at our fingertips.Of all the millions of americans out there, someone has the answer.someone has the abilily to solve this problem. I know we can find a way to solve any problem we have proved it time and time again. So!!! come on! Think and grow rich and save the world. We can do this!!!!! My thought is going in the direction of using hyrogen. but, we all need to use our minds to figure this out. Prove me wrong and show me how I love it. I love it and its my challange to you.
First let me be clear. I do not support $5 (or higher) gas prices. I do think an agenda driven government would support high gas prices though. High gas prices make those pathetic electric cars and go-carts more appealing to the masses... it's all about the money. Also I would hope high gas prices would spur a viable alternative to gasoline. The higher the price of gas, the more lucrative/incentive for an individual or company to find a substitute compatible with todays standard non-electric cars.
If the price of gas goes up to $5 a gallon, the tourist industry will suffer. Everyone associated with the tourist industry will also suffer. The other thing that will happen is that all goods and services will have to raise their prices to compensate for the increase in fuel costs. Everyone losses except the oil companies. Let's have some stories about the price going down to <$2 a gallon. Everyone benefits even the oil company profits might go up since people would be driving more.
I can't stop driving, I live in a rural area where it is not possible to either walk or ride bike to commute or shop.
"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.
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