Some experts predict oil could cost $100 a barrel by summer and that the price could go even higher. As the price rises, it is tempting to look for a link to the Gulf oil spill.
But CNNMoney quoted Tom Kloza, chief oil analyst for Oil Price Information Service, as saying, “The oil spill is an incredibly tragic story, a compelling political and environmental story, but what you pay at the pump has nothing to do with the oil spill.”
Time Magazine reported:
“The big reason for oil’s expected jump is rising demand from developing countries, which are approaching the same torrid pace of expansion they enjoyed prior to the financial meltdown of 2008. ‘The Asian recovery is coming on fast, with China and India leading the way,’ says David Pumphrey, deputy director of the Energy and National Security Program at Washington’s Center for Strategic and International Studies. In the case of China, the economic slack created by lower exports to the U.S. has been picked up by internal growth and trade with the rest of Asia as that country scrambles to raise the standard of living of a burgeoning middle class numbering in the hundreds of millions.
” ‘The oil market is revving up again,’ says economist Peter Tertzakian of Calgary-based ARC Financial Corp., an energy-investment firm with a $2.8 billion asset portfolio. ‘It wants to go higher, but it’s being held back.’ “
Still, on Tuesday, government analysts said they do not expect gasoline prices to rise above $3 a gallon in most states this year. (Prices are already above $3 in Alaska, Hawaii, Idaho, New York and Washington.)
“At about $2.90 a gallon, the average price for a gallon of unleaded gas is 10% higher than it was in January and 40% more than this time last year, according to motorist group AAA. Some analysts say the ramp-up in prices is due to market forces that make it more profitable to produce gasoline.
“… Although fears about the costly Gulf of Mexico oil spill and its impact on gasoline prices have surfaced, analysts say only a major surge in demand or a shock to supply, brought on by a geopolitical event, would be catalysts for much higher gasoline prices. The likelihood of those events, they say, is relatively low.”