Gas Prices Set to Jump Again…This Time Twenty Cents…

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U.S. consumers will be paying more for gas just in time for the holidays…much more. By the Thanksgiving holiday gas prices could reach $3.45 per gallon on average with some areas already seeing prices at $3.90 and higher, according to the government’s top energy forecaster.

Guy Caruso, head of the U.S. Energy Information Administration, stated that gas prices have not topped out yet. The recent jump in crude oil prices has been reflected in recent motor fuel costs which have already jumped twenty cents since October. 

“We haven’t seen the full pass-through (of high oil prices) yet,” Caruso told reporters at a briefing on oil market conditions and futures held at the Energy Department headquarters. “I would say what’s in the pipe right now (for gasoline) is about another 20 cents.”

If the projected gasoline price materializes, it would be the most consumers have ever paid to fill up at Thanksgiving will break the all-time high of $3.22 a gallon set last May, putting additional pressure on middle class families just before the holiday season.

With oil hitting a record $98.62 a barrel last week, the forecast seems accurate.

Thus far, healthy gasoline imports from Europe and weaker driving demand for this time of the year has helped soften the blow, Caruso said, adding that high prices are the result of strong global oil demand and tight supplies.

“There’s very little cushion in the market … consumption outpacing production,” he said.

He also added that, “We’ve seen steadily declining (oil) inventories.”

OPEC is scheduled to meet in early December to review their current oil production policy and export numbers. Karen Harbert, the assistant energy secretary for policy and international affairs, said the Bush administration has not received any messages from OPEC officials on whether the group will increase output.

If they do not, it would appear that prices will certainly rise as predicted.

“We hope they will take action when it’s necessary to ensure there is a much more calm and mutually beneficial (oil) marketplace,” she told reporters at the same briefing.

Caruso warned that if the group does not boost oil production levels, crude oil prices will stay “well above” $80 a barrel and push gasoline costs higher during next springs busy driving season.

Is $4.00 a gallon the new floor? Moreover, will the Bush administration help ease this burden by releasing some domestic oil reserves into the supply for a short period of time as Clinton did?

I bet not.

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Posted on November 14, 2007, in Financial Markets, Politics, Social Policy, Transportation and tagged , , , , , , . Bookmark the permalink. 1 Comment.

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