Results 1 to 4 of 4

Thread: Gas Getting Pricier, Oil Demand Rises

  1. #1
    Join Date
    Jan 2005
    Location
    America
    Posts
    30,715

    Gas Getting Pricier, Oil Demand Rises

    Gas Getting Pricier, Oil Demand Rises

    By BRAD FOSS, AP Business Writer

    WASHINGTON - With the petroleum industry pumping just barely enough fuel to keep the world's economic engine humming, a buying frenzy on oil markets is setting the stage for sharply higher gasoline prices as early as next week.

    Crude oil futures traded above $53 a barrel again on Friday, and analysts said the global supply tightness is likely to persist through 2005 due to an economic expansion that so far appears only moderately slower than the year before. But the cycle of rising incomes and ever higher energy prices won't last forever.

    "Those people who think we've entered a new paradigm where high oil prices don't affect economic growth are wrong," said Lawrence Goldstein, president of the Petroleum Industry Research Foundation in New York.

    What's happening today, Goldstein said, is that the blistering pace of economic growth in China, and to a lesser degree the United States, is overshadowing the financial drag that typically would be more prominent when energy prices soar. "Right now we're riding a wonderful cycle," he said.

    Indeed, reports released this week showed that most of the big retail chains posted strong sales gains in February, workforce productivity is rising, manufacturing is expanding and the U.S. economy added a better-than-expected 262,000 jobs last month.

    But for many drivers, it soon will be difficult to find any gas stations across America selling regular unleaded for less than $2 a gallon, analysts said. That's because gasoline prices on futures markets have soared 20 percent in the past week alone.

    The average retail price of gasoline was $1.93 per gallon last week, a 21 cent increase from a year ago, according to the Energy Department.

    "I have already heard from gasoline retailers that new shipments are costing them a dime more (per gallon)," said Peter Beutel, president of Cameron Hanover Inc. of New Canaan, Conn., a provider of petroleum market analysis. "By next week prices will be 10-15 cents higher at the pump in many places."

    "I believe oil prices and the economy are on a collision course and that it's only a matter of time," Beutel added.

    The greatest financial squeeze will surely be felt by low- and fixed-income families, who spend about three times as much of their wealth on energy as do middle-income families.

    But many economists are quick to point out that the hit to the U.S. economy won't be as bad as history might suggest, since the country is twice as efficient as it was 30 years ago and gasoline prices would have to rise another $1 per gallon to approach all-time highs on an inflation-adjusted basis.

    April gasoline futures rose 0.14 cent to settle at $1.5089 per gallon in trading Friday on the New York Mercantile Exchange. Crude futures rose 21 cents to $53.78 per barrel, but briefly surpassed $55 per barrel the day before.

    The record Nymex close was set last October at $55.17 per barrel, although prices would have to surpass $90 per barrel to meet the inflation-adjusted peak set in 1980.

    Global daily demand is expected to exceed 84 million barrels a day in 2005. The amount of extra output that could immediately be brought onto the market in the event of a supply disruption only amounts to about 1 percent of that total, according to several analysts. As a result, markets are frequently jolted by news of possible threats to production, whether it's a pipeline explosion in Iraq or a labor strike brewing in oil-rich Nigeria.

    While global economic growth is expected to cool in 2005, the United States and China alone will still need an additional 900,000 barrels of oil per day to meet rising energy demand, compared with the extra 1.4 million barrels a day consumed in 2004, according to Washington-based PFC Energy.

    "We're not out of the woods yet," said James Burkhard, global oil director at Cambridge Energy Research Associates, which is forecasting slightly higher demand than PFC Energy. "If there were to be a major supply disruption this year, we could go to price levels that are significantly higher than where we are now."

    While members of the Organization of Petroleum Exporting Countries, as well as the world's largest petroleum companies, are spending more on exploration and production this year, it could take a couple of years before the supply cushion grows to a more comfortable level, Burkhard said.

    At the same time, major oil companies like Exxon Mobil Corp. and ChevronTexaco Corp. are hesitant about investing too much in new production, Burkhard said. They fear bringing more supply onto the market than is needed and thereby causing prices to collapse - a scenario that played out most recently in the late 1990s, when oil prices fell below $11 per barrel.

    Because barrels of crude are priced around the globe in the U.S. currency, which has lost 8 percent of its value against the euro in the last four months, OPEC nations have signaled their willingness to accept higher than usual oil prices. Otherwise, their buying power would be greatly diminished when purchasing necessities or luxury goods from European suppliers.

    "It appears they have gotten pretty comfortable with high prices," though perhaps not this high, said John Felmy, chief economist of the American Petroleum Institute, a Washington-based trade group that represents major oil companies.

    Another powerful but less visible force behind the recent rally in oil prices has been the growth in energy trading by hedge funds and other speculators, according to traders and analysts who closely monitor the industry. Still, while these well-financed investors magnify the trends on oil markets, they do not start them, nor can they alone sustain them for very long, analysts said.

    Copyright 2005 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
    No One Knows Everything. Only Together May We Find The Truth JG


  2. #2
    Join Date
    Jan 2005
    Location
    America
    Posts
    30,715
    I think the person who wrote this is a Bush Supporter. Still not good though.
    No One Knows Everything. Only Together May We Find The Truth JG


  3. #3
    Giggles Guest
    Quote Originally Posted by Gold9472
    I think the person who wrote this is a Bush Supporter. Still not good though.
    I think it is a f***ing rip off making us pay $2.10 a gallon for gas. I'm with you Gold honey.

  4. #4
    somebigguy Guest
    It paints a pretty happy picture of our oil shortage doesn't it?

Similar Threads

  1. Cost Of Gas Rises To Record, And Could Go Higher
    By Gold9472 in forum The New News
    Replies: 0
    Last Post: 03-10-2008, 08:33 AM
  2. Replies: 0
    Last Post: 08-01-2007, 08:41 AM
  3. Replies: 3
    Last Post: 06-24-2007, 06:43 PM
  4. Number Of Deaths From Katrina Rises
    By Gold9472 in forum The New News
    Replies: 0
    Last Post: 05-20-2006, 02:12 PM
  5. U.S. Use Of Secret Warrants Rises
    By Gold9472 in forum The New News
    Replies: 0
    Last Post: 05-02-2006, 10:42 AM

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •