Monday, May 26, 2008

If $4 Gas Is Bad, Just Wait

If $4 Gas Is Bad, Just Wait - MarketWatch

The price of gas could continue to climb. In a worse case scenario reported by MarketWatch a gallon of gas could cost $6 to $7 in the next six months to two years. All of this depends on oil going up to $200 a barrel.
Many analysts consider $4-a-gallon retail gasoline across the U.S. a foregone conclusion this summer driving season, a period of typically peak demand, but those estimates take only current record-high oil prices into account. Thursday, light, sweet crude futures breached $135 a barrel, more than double the price a year ago.
If oil hits $200 a barrel, which is the upper end of Goldman Sach's prediction for prices over the next six months to two years, the gasoline picture changes quite dramatically. At $200 a barrel, crude alone would cost $4.76 a gallon. Add on the costs of refining and distributing as well as taxes, and pump prices could rise to a range of $6 to $7 a gallon.
U.S. drivers haven't radically changed their behavior, and it is unclear at what price it becomes unprofitable for Americans to go about their usual day-to-day activities, said Eric DeGesero, executive vice president of the Fuel Merchants Association of New Jersey.

Many American drivers already think it is too expensive to go about their daily business. The price of diesel has already topped $5 a gallon. Most goods are shipped via trucks. Trains run on diesel. Now would be a bad time to be in the shipping business. Look for the rates for shipping for both food and books from Amazon.com increase because the price of fuel will be passes along to consumers. Inflated fuel prices will speed inflation in other sectors of the economy.

The only thing drivers can do now is drive less: less demand will help bring down the cost of gas. And hope and pray we never see $7 a gallon gas.

3 Comments:

Blogger Rebecca Burch said...

Holy hell! Gas prices are already killing me. If it goes up to $7, I would have to quit my job.

10:12 AM  
Blogger oncee said...

I think you have hit on a key issue: at what point does it become unprofitable to drive to work? I don't even what think of the economic repercussions of less people, highly skilled, people leaving the labor pool, because they can't afford to drive to work.

10:30 AM  
Blogger www.bkroads.com said...

Since Iran stop accepting the US dollar for their oil...I expect it is only a matter of time before other countries follow. Once this happens the value of the dollar will take a dive and the cost of living will soar. Many will find value in that easily tossed penny again!

7:27 AM  

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