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Could gas prices hit $6 a gallon?

All we need are a couple of hurricanes, one economist says, combined with the crisis in Libya and the falling dollar.

By Kim Peterson Apr 22, 2011 2:06PM

Updated May 26, 4 p.m. EST

Planning to hit the road this summer? You might want to keep an eye on the AAA Fuel Gauge Report, which takes the daily temperature of gas prices around the nation.

The national average on May 26 for regular gas was $3.81 a gallon -- up $1.04 from a year ago. That's a 38% increase. Thankfully, gas prices have come down slightly in time for Memorial Day weekend, but some traders are betting that they'll rise again soon.

Gasoline futures are higher this week on the expectation that refinery outages in Illinois will cut into supply. Demand for fuel is likely to rise over the weekend as Americans hit the road.

As gas prices have soared this year, some experts wonder whether gas prices could reach $6 a gallon. Ridiculous? Not when you think about the perfect storm of factors pushing pump prices ever higher.


Speculators: A growing number of experts now think the gasoline market is being distorted by traders and investors who are speculating, Maclean's reports. "You simply can't explain these levels of volatility by supply and demand because market fundamentals don't shift that quickly over such a short period of time," a law professor and former commodity futures regulator told the magazine. "Most observers now believe speculators are actively manipulating oil prices."

Image: Buying gas (© moodboard/Corbis/Corbis)Libya: The U.S. doesn't even get much oil from Libya; most of Libya's light sweet crude goes to Europe. But the U.S. imports 40% of its crude from Europe, refines it and sends it back to Europe in the form of gasoline and diesel, ABC News reports.

So if Europe feels the hit from Libya, the U.S. will, too. Global oil output fell in March to 88.3 million barrels a day, a 700,000-barrel drop mainly due to reduced supply from Libya, MarketWatch reports. Experts are watching closely to see whether the unrest in the Middle East will spread to Saudi Arabia, which supplies 11% of America's crude oil, according to ABC News.

The falling dollar: The dollar is depreciating as investors realize the U.S. is not the place to find high interest rates on their money. They're going elsewhere for higher rates, causing the dollar to fall.

That means $1 won't buy as much gas as in the past (not that $1 ever bought much gas in recent memory). Commodities are priced in dollars, CNBC reports, and are coming at a discount on the foreign markets.

Image: Oil drums (© Kevin Phillips/Digital Vision/age fotostock)Rising demand: Economies across the globe are climbing out of recession, putting people back to work. They need more gas to get there, so demand is growing in strengthening economies.

All of those factors have led one economist, Richard Hastings at Global Hunter Securities in North Carolina, to think that $6 a gallon for gas is a real possibility. All you need now are a couple of damaging hurricanes in the wrong place, he told CNBC, and "prices could go up in a quasi-exponential manner."

Hastings said that in that case, gas would have no problem reaching $6.50 a gallon this summer.

We're already seeing people make changes in response to the uptick in gas prices. ABC News reports that in some cities, total strangers are meeting up to share a ride and hop into the carpool lane. Other people are showing new interest in hybrid or electric cars like the new Nissan Leaf.

Apr 22, 2011 3:36PM
You can be sure if the NEWS says gas is going to be $4.00 or $6.50 we will be paying it at the gas pumps immediately. How bout saying it's going to be $2.50 again so we can catch a break and have enough money to buy food a--holes.
Apr 23, 2011 1:12AM
Have you ever noticed that every time there is a hint that something might go wrong in this world gas prices spike, then a few months after gas has skyrocketed out come reports that the quarterly earnings for gas companys have risen by billions.  We are getting screwed to no end and the sad part about it is there is nothing we can do about it.  I am so pissed that I just had to get this off my chest.  F the gas companies and all of the political B.S. and lies that goes along with this sh--.   Ahhh thanks I feel better now.
Apr 22, 2011 5:32PM
The more this goes on, the more I think Trump might be right in that the countries we are deployed in perhaps we SHOULD seize the oil fields of those countries in order to be "reimbursed" for the cost of the actions there. Perhaps THEN the other countries of the world will be just in their thoughts the Americans ARE monsters (they all do anyway) and give them back their otherwise useless deserts without restoring them. Maybe in my older years I've become far more intolerant, but DAMN, multiple millions of dollars for a single Tomahawk? Take that out of your own personal wallets and stop using our tax dollars to keep those barbarians alive...
Apr 22, 2011 5:01PM
i think and wish the truckers would go on stirke until gas prices came down we need to do something to show we have some power
Apr 22, 2011 5:23PM

This is not a very well-written article.  Under Bush, the hedge funds were allowed to "bet" on gas prices.  Similar to other commodities, when the hedge funds get involved, the price fluctuates a lot (both up and down).  The hedge funds will push gas up as high as possible, take their profits and then run.  I read today that Obama was starting a task force to look at gas prices.  He need look no further than the fact that hedge funds are allowed to play with this commodity.  It needs to stop and it has nothing to do with the unrest in Libya (before that...Egypt).  This is what uninformed writers like this author want us to believe.  Poor writing in my opinion. 

Apr 22, 2011 6:05PM

Let the greedy morons keep raising the price of fuel. When the truck drivers can't afford to drive their trucks anymore because the fuel is to high. Then everything will come to a stop. No food, diapers, drink, supplies, meds, and so on. When the trucks stop, our supply line stops. Those greedy SOB's better start thinking before the truckers say ok that's enough. I remember when diesel was cheaper than regular, but it's way over premium now. Go ahead drive the prices to the point that people will finally wake up and overthrow this government and kicks their a$$es out. As far as I'm concerned I am sick to death of these greedy companies and corrupt government.


I ask you people this, what is a lobbyist? A lobbyist is just a new name for bribery = a person who bribes people to get their way which is suppose to be against the law.

Apr 22, 2011 5:08PM
I remember when $1.46 a gallon seemed expensive. damn...
May 27, 2011 6:50AM
If gas goes to even $5 a gallon, everyone should stop all unnecessary driving. We'll see how long it takes to make them bring it down again when they're stuck with a ton of gas they can't sell. That would teach the dirty greedy pigs a lesson.

Apr 30, 2011 8:34PM
why can't this r-e-a-l bright goverment cut all the forn aid tell all the countries to keep their oil stop sending food a-n-d money tell them when they get hungry to eat and drink their OIL we will eat our corn wheat beans ect and drill our own oil and gas
May 27, 2011 3:46PM

gas prices going up, food prices going up, health care costs going up, everything going up EXCEPT wages..that is not the way to get out of a recession.

time to tell the tree huggers to get lost and start using our own resources. plenty of oil and natural gas in this country to provide supply for many, many years.

time to tell the government to outlaw speculation on oil futures as this, i belive, is the main cause for the ungodly prices we are now stuck with.

Apr 22, 2011 5:06PM
When does the media start to blame Obama the way they blamed Bush?
Apr 22, 2011 5:49PM
I think everyone is missing the obvious solution.  We live in a country that has more then enough natural resources with coal, oil, and natural gas yet we continue to rely on other countries.  When are we finally going to stand up and say forget your ridiculous prices and be self sufficient!  We are suckers for letting the rest of the world dictate our prices and economy.  We could use a good president and as sad as it sounds I think Trump sounds like the best one for it.  Anyone who votes for obama again deserves what they get! 
May 27, 2011 3:34PM
Nationalize the Oil companies... take out the speculative market! PROBLEM SOLVED!!!
Apr 23, 2011 12:49AM
Oil companies are just greedy. Greed is what is running this economy down into the ground. No mater what the price is, they make money.
Apr 30, 2011 7:04PM
here we go i was looking awhile ago to see what other countrys are paying for fuel in one country gas is $0.08 a gallon WTF is it with the U.S. paying for fuel prices like we are? One thing would be the fact is that big oil is lining there pockets and we all are going to pay .Unless we stop buying from forgein oil and start drilling it here. We have oil supplys capped off and the government is paying them to keep them capped. How stupid can we be not to open those capped oil pumps and start getting our owne oil like it use to be ? Instead we keep going back to forgien oil . Tell the government to start drilling instead of keeping there hands in there pockets.
Apr 30, 2011 6:23PM

this goes to the author of this article (kim Peterson).  Why aren't you writing and article, on how these CEO's should be rolling a portion of their 36.5 billon profit back into the gas pumps to easy the bourdon.  Why aren't you writing about, how the oil companies are letting the stock market  do the price gouging for them.  Why aren't writing about how the oil companies are not paying 100.+ dollars for oil, and how they have long term purchase contracts for $30-50 per barrel for oil, and the true whole sale price for gas is really $2.00-2.25 per gallon.


That's why these companies are raping in 36.5 billon in profits, the stock market is a legal form of price gouging.  But here's the biggest question you should writing about, before all these middle east up rising started to occur (MONTHS),  how did these stock speculators know the price of gas would be $5.00/gallon by summer.  Now do some serious writing and get back to us - The American People.

May 27, 2011 9:48AM
If gas is at or over $5 a gallon at next presidential election, Obama is toast as far as getting re-elected.
May 27, 2011 10:19AM
To the guy who said gas started going up when G.W. Bush went in office:  ???  Gas started going up in the 70's, YEARS before ANY Bush was president.  Hello!!!  Remember when people got in line for gas for HOURS?  But, no.  You're probably not old enough to remember that, which is why you're following the media's teachings and blaming everything from gas prices to global warming to premature balding on one or other of the Bush Presidents. Please, check your facts.
Apr 22, 2011 5:19PM
They won't go up that high if these speculators would keep their mouths shut and try to find a more meaningful purpose in life. This is all driven by a bunch of fools on Wall Street that keep making claims without any evidence, and we believe them. Libya should have no effect on the price of oil. That is a perfect example of the excuses these people use. Back in the 1980s gas there was all kinds of termoil in the Middle East and that didn't push prices up, so why now all of a sudden? These articles don't make the situation any better either.
Apr 22, 2011 5:14PM

"But the U.S. imports 40% of its crude from Europe, refines it and sends it back to Europe in the form of gasoline and diesel"


Who cares where Europe gets their oil from? Especially since the quote above says we just refine it and send it back to them...doesn't say we use it. This is plain and simple screwing of the American people! If our elected officials would put the interest of the American people first and I'm not just talking about their lobbyist friends and big business...gas would be less than $3/gallon. The US needs to stop sending the oil it produces to other country's for huge profits...period! We produce more than enough to cover our own needs. Now I'm not against them making some money on it in the free market...but do it AFTER the American peoples needs are taken care of first and keep our prices down. That will help America get the ship righted and people back to work....this is killing any chance of that happening now. I don't care how much the President or any other politician tries to spin things and tell us all everything is just fine. It's not...except for the folks in DC that have all their health care and retirement needs taken care of...the rest of us sure don't!

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