Posted By RichC on April 9, 2008
Like clockwork, the gas station in our my area (Cincinnati, OH) moved the gas price up in concert again. The $3.13 per gallon that “I should have filled up with” on Monday was back up to $3.35 by Tuesday afternoon. It will probably go even higher according to the U.S. Government Energy Department. Estimates suggest that Americans could see retail gasoline prices climb to $4.00 per gallon this summer, although the Energy Information Administration believes it will peak at $3.60 … which is up ten cents from its previous $3.50 estimate earlier this year. With prices at these record levels, they also expect a drop in demand, at least in the U.S. (world demand remains high) Our weak economy coupled with high prices during the summer will likely keep drivers off the road and this reduce travel could drop petroleum usage by 90,000 barrels per day and possibly moderate the expected peak prices.
The biggest concern is that diesel prices have seen the largest change this past year. With an increase of .74 cents per gallon since 2007, those growing and transporting foods to market, running heavy equipment or shipping goods need to pass this cost onto consumers. Can you say I-N-F-L-A-T-I-O-N?
According the EIA, the price of crude oil is the primary reason that gasoline and diesel prices are going up. As oil settles over $100 a barrel up significantly from last year, people are just going to have to adjust to paying more for fuel — and the goods made and transported by it. The primary reason for the high prices is that the world demand is high; countries like China, India, Russia and the Middle East are continuing to increase their consumption. The EIA acknowledged â€œsignificant uncertaintyâ€ in its oil price projections, noting that unexpected supply disruptions due to conflict in oil-producing nations, unusual weather or refinery outages could send prices spiraling sharply higher. There is also potential for the opposite … if the U.S. economy continues to weaken even more and this spreads to other countries demand for oil will drop.