Gas Prices Set to Rise Nearly 40 Cents in Coming Days; $5 per Gallon by the End of Summer

Gas Prices Set to Rise Nearly 40 Cents in Coming Days

February 24, 2011

Infowars.com - Earlier this week, market analysts warned that the price of gas may reach $5 by the end of summer. Now they are saying we could see that price by Memorial Day as the situation in Libya deteriorates.

On the S&P 500 today, the price of Brent Crude breached $119 a barrel during a period of frantic trading. Brent Crude is used to price two thirds of the world’s internationally traded crude oil supplies. The price was below $100 yesterday afternoon.

The world’s oil benchmark jumped almost $17 this week and it appears there is no end in sight as the situation in the Middle East heats up.

Saudi Arabia is under pressure to boost output as the prospect of a Libya production cutoff looms.

Oil traders said Saudi talks with Europe signal that the oil kingdom understands that the political crisis in Libya is now an oil supply crisis.

On Thursday, the Italian oil company Eni, the most active company in Libya, said oil production from the North African country has dropped to just a quarter of normal levels.

“You can only expect the price to go up. It is fear of the unknown. The risks are all to the upside,” a senior oil trader told the Financial Times. “Saudi Arabia needs to respond.”

Popular uprisings spanning the Middle East have yet to seriously affect Saudi Arabia. In an effort to stave off rebellion, earlier in the week Saudi Arabia’s ailing King Abdullah promised to lavish around $37 billion on his subjects. The money will go for housing, education, social security, and other benefits.

In neighboring Bahrain, a similar pay-out scheme failed to stem protests that turned violent. King Hamad had offered to pay $2,650 to every Bahraini family. The protests calling for political change have seriously damaged the small nation’s economy and tourism industry. Standard and Poor’s lowered its credit rating this week and Bahraini authorities canceled next month’s Bahrain Grand Prix Formula One race, the pride of the royal family.

According to Saudi rights activist Hassan al-Mustafa, Abdullah’s spending won’t solve anything.

The Saudi people want “real change,” such as an elected parliament and more rights for women. That sort of evolution “will be the only guarantee of security of the kingdom,” explained al-Mustafa.

Hundreds of people have backed a Facebook campaign for a Saudi “day of rage” in March in response to the lack of political change in the kingdom and it solidarity with other popular rebellions sweeping the region.

In response to the unprecedented rise in oil prices, analysts are predicting the price of gasoline will shoot up ten to fifteen cents per gallon over the next few days.

Analytics economist Chris Lafakis put the number even higher. Oil prices have already jumped $12 this week, which means that drivers can “expect gas prices to be 37 cents higher” in the coming days, he told CNN.

The national average price of a gallon of gasoline rose 3.4 cents overnight to $3.228, according to AAA.

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Gas Pump Prices Highest Ever for This Time of Year

February 12, 2011

AP – U.S. gasoline prices have jumped to the highest levels ever for the middle of February. The national average hit $3.127 per gallon on Friday, about 50 cents above a year ago.

The price is about 6 percent higher than on this date in 2008. The next day, pump prices began a string of 32 gains over 34 days. They rose 39 percent over five months, eventually hitting an all-time high of $4.11 per gallon in July.

Although gas prices are expected to rise, most experts aren't expecting a reprise of 2008, when the price spike forced many drivers to join car pools and trade in gas-guzzling SUVs for fuel-efficient cars.

"It would be a mistake to think we're going to have that all over again," said OPIS chief oil analyst Tom Kloza.

He says oil demand will slide in the U.S. by May, as refineries slow fuel production while they switch to summer blends of gas. World oil consumption also may not rise as much as expected.

And Kloza contends that oil traders are more cautious now, after getting burned when oil plunged to $33 per barrel in early 2009, just six months after hitting $147 per barrel. Even the most bullish traders no longer think they can chase commodity prices higher without risk, he says.

Still, Kloza expects gas to reach $3.50 to $3.75 per gallon this spring because of the usual run-up in prices ahead of the summer driving season. That would mean an increase of 12 to 20 percent from the current level.

Gasoline climbed almost 10 percent since November as oil prices rose because of factors including stronger demand from China, a frigid winter in the U.S. and tension in Egypt, Kloza said.

The price of Brent crude, a key oil contract that also influences U.S. gasoline prices, hit $100 per barrel in January for the first time since 2008.

"It was a perfect storm," said Kloza.

Oil prices retreated Friday after Egypt's President Hosni Mubarak handed over power to the military and left Cairo.

Benchmark West Texas Intermediate crude for March delivery fell $1.15 to settle at $85.58 a barrel on the New York Mercantile Exchange. That's lower than the price on Jan. 25, when the demonstrations in Egypt began.

Investors have been concerned that the anti-government protests over the past 18 days could spread to other parts of the Middle East and disrupt oil supplies. Now that Mubarak has stepped down, the military says it will oversee a democratic transition to a new government.

"The market is getting whipsawed," oil analyst Stephen Schork said. "Everyone is playing the card that stability in Egypt is good for oil" shipments.

In other Nymex trading for March contracts, heating oil fell 1.49 cents to settle at $2.6958 per gallon and gasoline lost less than a penny to settle at $2.4652 per gallon. Natural gas lost 7.6 cents to settle at $3.910 per 1,000 cubic feet.

In London, Brent crude fell 50 cents to settle at $100.94 a barrel on the ICE Futures Exchange.

Oil Prices Rise as Middle East Clashes Continue

February 18, 2011

AP - Oil prices rose Friday as anti-government clashes in the Middle East kept worries of oil supply disruptions alive ahead of the Presidents Day holiday weekend.

Closer to home, motorists planning trips during the three-day weekend found gas pump prices about 54 cents higher than a year ago, with prices for a gallon of regular ranging nationally from $2.958 to $3.752.

The national average for a gallon of regular was $3.156 on Friday, according to AAA, Wright Express and the Oil Price Information Service.

Instability in the Middle East was the biggest worry for most energy traders on Friday. Troops in Bahrain confronted thousands of protesters calling for an end to the country's monarchy. In Libya, Moammar Gaddafi's regime deployed security forces and warned citizens against joining the unrest in which dozens of protesters have been killed. Protests also continued in Yemen for an eighth day.

"With a long weekend ahead of them, traders were concerned that they could return on Tuesday to a world that could conceivably be changed from the one left behind," said analysts at U.S. energy consultancy Cameron Hanover.

Meanwhile, China again sent a signal to banks to curb lending in an effort to cool economic growth and control inflation. Some of those steps previously hurt oil prices, but now the markets see them as largely ineffective, said analyst Stephen Schork.

"Right now, I think Middle East news trumps all," he said.

Benchmark West Texas Intermediate oil for April delivery rose 87 cents to settle at $89.71 a barrel on the New York Mercantile Exchange. Brent crude for March delivery lost 7 cents to settle at $102.52 on the ICE Futures exchange in London.

Analysts say the price of Brent, which is the benchmark for North Sea production, has been affected more than traditional benchmark WTI by events in the Middle East, because it is a reference price for oil produced in other areas, such as Africa and South America. Production interruptions also have helped keep Brent above $100 a barrel since the end of January. High U.S. crude inventories and sluggish demand are keeping the price of WTI below that of Brent.

In other Nymex trading, heating oil lost 1.95 cents to settle at $2.7129 a gallon and gasoline rose 2.36 cents to settle at $2.5513 a gallon. Natural gas added 0.8 cent to settle at $3.876 per 1,000 cubic feet.

Consumer Prices: Ugly

February 17, 2011

Market Ticker - This looks interesting….

The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.4 percent in January on a seasonally adjusted basis, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 1.6 percent before seasonal adjustment.

Increases in indexes for energy commodities and for food accounted for over two thirds of the all items increase. The indexes for gasoline and fuel oil both increased in January, continuing their recent strong upward trend. The index for food at home posted its largest increase in over two years with all six major grocery store food group indexes rising.

Naw, nobody needs to buy those things, right? Ha!

The energy index has increased 7.3 percent over the last 12 months, with the gasoline index up 13.4 percent.

Gee, that’s not a big deal, right?

Now let’s look inside the PDF version and see what sort of surprise is in the table?

Let’s see…. we commonly hear that monetary policy has a lag. Like, oh, six months or so.

Well, we’re about there, right? So let’s see, if we take those last two prints and annualize them (1.004 ^ 12) we get a 4.91% annual “inflation” rate. Is this “stable” prices Ben?

You folks know my view on this. Inflation is manifested in prices but it’s not prices. That is, CPI is a horsecrap measurement, because inflation and deflation is defined by the change in money and credit compared against GDP. The Austrians will tell you it’s just money supply. I argue that this is a bad definition because money and credit spend the same, and fungible things must be counted equally.

In any event there are some real stunners in the unadjusted numbers, which I’ll highlight for you:

These are big annualized changes, and they’re in places where the lower-income people in this nation cannot afford them.

Food, particularly healthy food, cooking oils and similar essentials for preparation, heating fuel, water, sewer and trash collection, gasoline, used cars and public transport are all places that hit the lower income American (those at the 50th percentile and below) radically hard.

The brainstems in Washington DC, including Bernanke, will never get their arms around these numbers and recognize that they are absolutely destroying the majority of the population – which, incidentally, have to be able to function and keep their cool in order for all the fatcats to be able to keep their jobs and keep the economy “moving.”

When you look at the actual percentage of income that these people spend in this area – virtually all, when you get down to it – this is the sort of squeeze that, if it continues, has the potential to produce severe political and civil problems.

No, we’re not Egypt.

Yet.

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