Several economic factors have combined to launch gas costs on an upward climb within the coming year. Crude oil futures passed $90 a barrel last week. Analysts say an improving global economic outlook and a devalued United States dollar have contributed to the escalation. Across much of the U.S. average gasoline prices are above $3 a gallon and experts say there’s no turning back.
Gasoline prices put a strain on earnings
For the 1st time since October 2008, the average gasoline price within the U.S. went over $3 a gallon. Also, over ninety dollars a barrel is paid for Oil prices now. This is the 1st since October 2008 as well. According to the American Automobile Association, average gasoline prices within the United States have gone up 4 percent in the past month and up 16 percent from a year ago. The average driver spent $305 on gasoline in December, as outlined by the Oil Price Information Service. After the oil shock of 2008, there has been a 4.2 percent increase, 6.5 percent just for this past year, in the percent of median home earnings this year using gas which is now at 7.6 percent accounts PortiaGroup.
Gasoline prices on driving
In Nov, TX tycoon T. Boone Pickens predicted the crude oil would start selling for $100 a barrel in 2011. The gas costs were already rising when this was forecasted though. Pickens made this very same prediction before. In 2008 he said it would happen. That year gas went up to $145 a barrel. It taken place in July. Over $4 a gallon was paid for gas within the summer of 2008. Steep price increases forced customers to curtail driving habits. As demand plummeted, prices adjusted accordingly. What is different about rising gas costs in December 2010 is that demand has remained constant. The current spike in gasoline costs is happening due to the decreasing value of the United States dollar also as a rise in the trading activity for oil futures.
Where gasoline costs will maximum out at
Former president of Shell Oil explained that gasoline prices will continue to rise in order to hit $5 a gallon in 2012. Platt’s Energy Week talked to John Hofmeister who said that gas prices will likely go up with global oil demand. Other analysts agree that $5 a gallon gas is inevitable, but say the global economy won’t grow fast enough to reach that price by 2012. The Organization of Petroleum Exporting Countries explained in December that next year there will most likely be a lower growth in global oil demand. Oil is getting close to $100 a barrel. There has not been any more production from the OPEC though.
Dallas Morning News