Would you pay more than $4.50/gallon at the pump?

wsj.com
May 7, 2008

A growing number of oil-market watchers say voters riled by soaring fuel costs may face far worse this summer, as factors ranging from unrest in Nigeria to slumping production in Russia could shove benchmark oil prices over $150 a barrel.

U.S. benchmark crude notched another record Tuesday, settling at $121.84 on the New York Mercantile Exchange. Nymex crude oil so far this year is up 27% and is now 17% above its previous inflation-adjusted record in April 1980. It is up 96% from a year ago.

Oil's seemingly unstoppable surge has led some analysts to issue gloomier price outlooks. Goldman Sachs Group Inc., which predicted the latest run-up, says the world may face a "super-spike" in which crude ranges from $150 to $200 a barrel as early as October, up from just over $120 now.

"That would put oil at unprecedented price levels, even going back to just after the Civil War," said Stephen Brown, an energy economist at the Dallas Federal Reserve Bank. A sustained price of $150 a barrel, he estimates, would shave around 1.8% percentage points off U.S. economic output in the first year, and a further 1.5% in the second year. The U.S. economy in the first quarter grew at an anemic 0.6% annual pace.

At the pump, $150 oil translates into gasoline prices of more than $4.50 a gallon, putting further strain on U.S. auto makers, airlines and utilities. It would also stoke the political debate in Washington. Regular grade gasoline in April averaged $3.46 a gallon.

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Texas gas prices continue upward trajectory

© 2008 The Associated Press

It was another week, another record-high for Texas gasoline prices.

Prices at gas pumps reached new record highs in all 11 regions in the weekly AAA Texas gasoline price survey released Friday.

There may be hopeful news on the horizon, said auto club spokeswoman Rose Rougeau.

"A recent government report showed that demand for gasoline fell slightly more than six percent in February from January," she said. "The drop could be attributed to February being a shorter month and a time of slow demand, but it may also suggest high gas prices are cutting consumers appetite for fuel."

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