Gas May Soon Cost a Sawbuck Big New Shock at the Pump Forecast by Two Analysts By DAN DORFMAN, Special to the Sun | April 28, 2008
Get ready for another economic shock of major proportions — a virtual doubling of prices at the gas pump to as much as $10 a gallon.
AP/Reed SaxonClick to enlarge>A customer pumps gas in Los Angeles, where self-serve regular gasoline exceeds 4 dollars a gallon.That’s the message from a couple of analytical energy industry trackers, both of whom, based on the surging oil prices, see considerably more pain at the pump than most drivers realize.
Gasoline nationally is in an accelerated upswing, having jumped to $3.58 a gallon from $3.50 in just the past week. In some parts of the country, including New York City and the West Coast, gas is already sporting a price tag above $4 a gallon. There was a pray-in at a Chevron station in San Francisco on Friday led by a minister asking God for cheaper gas, and an Arco gas station in San Mateo, Calif., has already raised its price to a sky-high $4.62.
In Manhattan, at a Mobil gas station at York Avenue and East 61st Street, premium gas is now $4.03 a gallon. Two days ago, it was $3.96. Why such a high price? “Blame the people at STOPEC (he meant OPEC) and the oil companies,” an attendant there told me.
These increases are taking place before the all-important summer driving season, signaling even higher prices ahead.
That’s also the outlook of the Automobile Association of America. “As long as the price of crude oil stays above $100 a barrel, drivers will be forced to pay more and more at the gas pump,” a AAA spokesman, Troy Green, said.
Oil recently hit an all-time high of nearly $120 a barrel, more than double its early 2007 price of about $50 a barrel. It closed Friday at $118.52.
The forecasts calling for a jump to between $7 and $10 a gallon are based on the view that the price of crude is on its way to $200 in two to three years.
Translating this price into dollars and cents at the gas pump, one of our forecasters, the chairman of Houston-based Dune Energy, Alan Gaines, sees gas rising to $7–$8 a gallon. The other, a commodities tracker at Weiss Research in Jupiter, Fla., Sean Brodrick, projects a range of $8 to $10 a gallon.
While $7–$10 a gallon would be ground-breaking in America, these prices would not be trendsetting internationally. For example, European drivers are already shelling out $9 a gallon (which includes a $2-a-gallon tax).
Canadians are also being hit with rising gas prices. They are paying the American-dollar equivalent of $4.92 a gallon, and they’re being told to brace themselves for prices above $5.65 a gallon this summer.
Early last year, with a barrel of oil trading in the low $50s and gasoline nationally selling in a range of $2.30 to $2.50 a gallon, Mr. Gaines — in an impressive display of crystal ball gazing — accurately predicted oil was $100-bound and that gasoline would follow suit by reaching $4 a gallon.
His latest prediction of $200 oil is open to question, since it would undoubtedly create considerable global economic distress. Further, just about every energy expert I talk to cautions me to expect a sizable pullback in oil prices, maybe to between $50 and $70 a barrel, especially if there’s a global economic slowdown.
While Mr. Gaines thinks there could be a temporary decline in the oil price, he’s convinced an overall uptrend is unstoppable. In fact, he thinks his $200 forecast could be conservative, and that perhaps $250 could be reached. His reasoning: a combination of shrinking supply and increasing demand, especially from China, India, and America.
Mr. Brodrick’s $200 oil forecast is largely predicated on a combination of pretty flat supply and rip-roaring demand. Other key catalysts include surging demand in China and India, where auto sales are booming, and major supply disruptions in Nigeria and also in Mexico, our second-largest source of oil imports, where oil production has fallen off a cliff.
More factors include the ever-present danger of additional supply disruptions from volatile countries in the Middle East that are not our allies, and the unwillingness of SUV-loving Americans to trim their unquenchable thirst for foreign oil. Likewise, for the first time, emerging markets this year will use more oil than America.
To Mr. Brodrick, it all adds up to an ongoing energy bull market. His favorite plays are the Energy Select Sector SPDR Fund ; United States Natural Gas Fund LP; Apache Corp.; Occidental Petroleum; Anadarko Petroleum, and Schlumberger.
A big problem is a all the people who are speculating and fear mongering that jumps the price. Plus all the people are investing in oil and that is artificially inflating the price, many people have said its adding at least $30-$40 dollars to the cost per barrel, I'll find the article for that. This is one place I would almost welcome government regulation just due to the false inflation in its market.
_____________________________
My carbon footprint is bigger than your carbon footprint. Speed has never killed anyone. Suddenly becoming stationary... that''s what gets you.
A big problem is a all the people who are speculating and fear mongering that jumps the price. Plus all the people are investing in oil and that is artificially inflating the price, many people have said its adding at least $30-$40 dollars to the cost per barrel, I'll find the article for that. This is one place I would almost welcome government regulation just due to the false inflation in its market.
exactly. Oil needs to get the hell of Wall Street and you'll see better prices right away. Let the boys play with stocks all they want but vital resources have no place there.
exactly. Oil needs to get the hell of Wall Street and you'll see better prices right away. Let the boys play with stocks all they want but vital resources have no place there.
well oil isn't on wallstreet...and it isn't a stock either. It's a commodity. Seriously though who should control the price of oil? The general public has access to this market, its just expensive to get started. I think the market is a good check and balance, however hedge funds can bully the market around with large orders causing locals and others to follow. If oil companies or govt controlled the prices we wouldnt have a check and balance. In a market there has to be a seller for every buyer. Govt can just say, this is the price pay it or walk. Atleast the market has an opportunity to swing back down
IMO, the U.S. needs to get its stuff together and advance a bit in technology. Bigger research and investments in solar powered / geothermal housing, wind, and hydro electricity would be a good start. That should lower the need of fossil fuels that would be used for heating.
When government starts trying to regulate or place price caps we start seeing SHORTAGES or basically compainies refusing to sell it.
While I think 10 a gallon is obsurd, and quite unlikley, until something happens (good or bad) gas will continue to rise slowly (in comparison to the 100% jump since early last year)
_____________________________
Hopefully running by the weekend. Gonna run her good too!
A big problem is a all the people who are speculating and fear mongering that jumps the price. Plus all the people are investing in oil and that is artificially inflating the price, many people have said its adding at least $30-$40 dollars to the cost per barrel, I'll find the article for that. This is one place I would almost welcome government regulation just due to the false inflation in its market.
QFT.
Thank God there is someone on here who actually knows what is going on. Oil is really worth about 45 bucks a barrel right now
< Message edited by QatarStang -- 4/30/2008 5:46:43 AM >
Posts: 2973
Joined: 12/15/2006 From: Lafayette/Gulf of Mexico, LA Status: offline
Well as soon as Qatar finishes that new production facility oil will realistically be worth a mere $35 a barrel. Now I wouldn't expect to see a plummit in price at the pump by any means, why cut into your profits when all of the domestic oil companies have been breaking records non-stop, even the demand has dropped off about 10% and we are at an all time high for surplus.
The oil industry currently violates many rules of governing dynamics and basic economy structures all for fast $$$. The supply in demand requires a certain balance, when demand is higher than supply, price increases. Our demand is actually getting much lower than the supply, yet the prices are still increasing, this should be stopped by the Trade Commission.
3 of the companies that are mentioned to invest in are companies that I work with every day. Schlumberger is known as one of the WORST companies out here, their equipment constantly fails, they have constant mass layoffs, they only care about money and nothing else. They have been ran off of every job I've ever been on.
Apache is a tiny company, Trans-ocean, Ensco, BHP, BP, Chevron, Shell, these are the big hitters, the ones that can change the face of the industry if one of them collapses or gains excessive power. Oil companies generally provide nothing but an end product. Exploration companies go out and find oil, then drilling companies make a hole with the aid several 3rd party companies like me, then production comes in and starts pumping it to land, and then it is sold to the oil companies for whatever the stock market says it's to be sold at for that day.
And yes, commodities are traded on wall street, and many are regulated, but not oil, at least not in this country.
It's people like the ones in the article that are falsly raising gas prices to fatten their own wallets. Some ass was on tv the other night saying oil could go up to $300 per barrel by 09. Yet due to the channel he was on, it wasn't rebutted with anyone questioning how or why, he just said it, and they ran with it. That's exactly what is going on.
In 2-3 years it won't matter that much because either
a) We will have adapted to higher fuel prices with hybrids, full electric, and/or little wind-up cars (some of them mega-mpg diesels), increased motorcycle, moped, bicycle traffic etc etc, just like Europe is today.
or
b) The recession of the present day, the price of gas as of right now, skyrocketing unemployment, repossessions, foreclosures, etc etc will result in a never-before-seen explosion of desperation, crime, every man for himself, and will leave America a barren wasteland a la Mad Max. So the remaining handful of people still alive will have to deal with the increased price of gas.
Printable Version
10$ a gallon in 2-3 years - 
RE: 10$ a gallon in 2-3 years - 
