Oil Finishes 2007 with Biggest Gain - 1/2/08

Crude oil finishes 2007 with a 60% gain since the beginning of the year.  This is the largest gain in one year since 1999, ending the year around $96.00 a barrel.  Gasoline is up 30% from a year ago at $3.00 a gallon.

Energy prices fell at the beginning of the year due to an increase in supplies.  Oil dropped below $50.00 a barrel in early 2007, while gasoline dropped to a national average of $2.10 a gallon.

This drop in oil prompted OPEC to continue production cuts which began in October 2006, taking 85 million barrels a day off the market.

By spring, with driving season upon us and tension from Iran’s nuclear program, oil increased to $60.00 a barrel.  Refinery production lagged and gasoline supplies fell.  This combination pushed the national average of gasoline to a record high of $3.22 a gallon. 

Continued tension overseas and the looming hurricane season pushed oil to $70.00 a barrel.

With an uneventful hurricane season, oil fell to $60.00 a barrel and gasoline fell to $2.70 a gallon. 

Then a big run up caused by one event after another through September and October.  OPEC’s production cuts began to cause inventories to fall. The dollar and housing markets where falling, interest rates were cut to promote economic growth and demand from developing countries all pushed oil higher.

By September oil crossed $90.00 a barrel for the first time ever.  This made oil just as expensive as it was in the early 1980s when adjusted for inflation.

Experts believe we will see up to $110.00 a barrel by 2008.  We may see $4.00 a gallon gasoline in 2008.

To see what crude oil is currently at go here: Current Oil Prices

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