$10 Gasoline Soon - 5/5/08

Gasoline throughout the nation has been surging, as of today the national average is $3.68.  These increases are taking place before the summer driving season, which brings on ever higher prices.  AAA spokesman Troy Green stated, “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”. 

Oil hit an all time high of $120 a barrel a few weeks ago; over double the price it was in early 2007. 

Many forecasters are expecting an increase of $7.00 to $10.00 a gallon, based upon the view oil may hit $200 a barrel in two to three years. 

$7 .00 to $10.00 a gallon may be extreme for Americans, but European drivers are already paying $9.00 a gallon.  Canadians are paying $4.92 a gallon and expect to see $5.65 by the summer.

Early last year oil was trading at $50 a barrel and gasoline was averaging $2.50 a gallon.  So if you just do the math, $100 oil would cause gasoline to be around $4.50 to $5.00 a gallon.  There is normally a 30 to 60 day lag in the price of gasoline behind the price of oil.

With shrinking supply and increasing demand from China, India and America, then add to the mix a poor oil producing infrastructure and supply disruptions from volatile countries in the Middle East, $200 oil may be a conservative estimate.

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