Here it comes: $10-per-gallon gas

... And, thanks to obstinate leaders at the state (Scott Walker) and national level (the Bush petro-gang), we will be far from ready to deal with the consequences.

Who needs sane mass transit when we can all drive?

From The New York Sun:

Gasoline May Soon Cost a Sawbuck -
Big New Shock at the Pump Forecast by Two Analysts

BY DAN DORFMAN - Special to the Sun
April 28, 2008

Get ready for another economic shock of major proportions — a virtual doubling of prices at the gas pump to as much as $10 a gallon.

That's the message from a couple of analytical energy industry trackers, both of whom, based on the surging oil prices, see considerably more pain at the pump than most drivers realize.

Gasoline nationally is in an accelerated upswing, having jumped to $3.58 a gallon from $3.50 in just the past week. In some parts of the country, including New York City and the West Coast, gas is already sporting a price tag above $4 a gallon. There was a pray-in at a Chevron station in San Francisco on Friday led by a minister asking God for cheaper gas, and an Arco gas station in San Mateo, Calif., has already raised its price to a sky-high $4.62.

In Manhattan, at a Mobil gas station at York Avenue and East 61st Street, premium gas is now $4.03 a gallon. Two days ago, it was $3.96. Why such a high price? "Blame the people at STOPEC (he meant OPEC) and the oil companies," an attendant there told me.

These increases are taking place before the all-important summer driving season, signaling even higher prices ahead.

That's also the outlook of the Automobile Association of America. "As long as the price of crude oil stays above $100 a barrel, drivers will be forced to pay more and more at the gas pump," a AAA spokesman, Troy Green, said.

Oil recently hit an all-time high of nearly $120 a barrel, more than double its early 2007 price of about $50 a barrel. It closed Friday at $118.52.

The forecasts calling for a jump to between $7 and $10 a gallon are based on the view that the price of crude is on its way to $200 in two to three years.

Translating this price into dollars and cents at the gas pump, one of our forecasters, the chairman of Houston-based Dune Energy, Alan Gaines, sees gas rising to $7-$8 a gallon. The other, a commodities tracker at Weiss Research in Jupiter, Fla., Sean Brodrick, projects a range of $8 to $10 a gallon.

While $7-$10 a gallon would be ground-breaking in America, these prices would not be trendsetting internationally. For example, European drivers are already shelling out $9 a gallon (which includes a $2-a-gallon tax).

Canadians are also being hit with rising gas prices. They are paying the American-dollar equivalent of $4.92 a gallon, and they're being told to brace themselves for prices above $5.65 a gallon this summer.

Early last year, with a barrel of oil trading in the low $50s and gasoline nationally selling in a range of $2.30 to $2.50 a gallon, Mr. Gaines — in an impressive display of crystal ball gazing — accurately predicted oil was $100-bound and that gasoline would follow suit by reaching $4 a gallon.

His latest prediction of $200 oil is open to question, since it would undoubtedly create considerable global economic distress. Further, just about every energy expert I talk to cautions me to expect a sizable pullback in oil prices, maybe to between $50 and $70 a barrel, especially if there's a global economic slowdown.

While Mr. Gaines thinks there could be a temporary decline in the oil price, he's convinced an overall uptrend is unstoppable. In fact, he thinks his $200 forecast could be conservative, and that perhaps $250 could be reached. His reasoning: a combination of shrinking supply and increasing demand, especially from China, India, and America.

Mr. Brodrick's $200 oil forecast is largely predicated on a combination of pretty flat supply and rip-roaring demand. Other key catalysts include surging demand in China and India, where auto sales are booming, and major supply disruptions in Nigeria and also in Mexico, our second-largest source of oil imports, where oil production has fallen off a cliff.

More factors include the ever-present danger of additional supply disruptions from volatile countries in the Middle East that are not our allies, and the unwillingness of SUV-loving Americans to trim their unquenchable thirst for foreign oil. Likewise, for the first time, emerging markets this year will use more oil than America.

To Mr. Brodrick, it all adds up to an ongoing energy bull market. His favorite plays are the Energy Select Sector SPDR Fund ; United States Natural Gas Fund LP; Apache Corp.; Occidental Petroleum; Anadarko Petroleum, and Schlumberger.

Dandordan@aol.com

Comments

[rawdawgbuffalo]

can u say petro dollar warfare

http://rawdawgb.blogspot.com/2008/04/peg-petrodollar-warfare.

[Josh Strupp]

A bunch of non-sense.

This run up in crude prices is primarily due to the weak dollar. To put this in perspective, Europe has seen a relatively small increase in gas prices in the last year. The dollar's most likely at it's bottom. These guys are alarmists. You are more likely to see $90/barrel oil than even $150/oil in 2-3 years.

Even if we do see $10.00/gallon at the pump in the next 2-3 years (pretty much impossible), you and I have bigger problems than getting to and from work cheaply.

Let's not jump off the deep end here.

[bildekor]

Quite nicely written actually, i like it. :)

[J. Strupp]

"analysts".

[J. Strupp]

"Mr. Brodrick's $200 oil forecast is largely predicated on a combination of pretty flat supply and rip-roaring demand."

The problem here is that Mr. Brodrick doesn't take into account the fact that oil was seriously over-valued at $140/barrel even if there is, "rip-roaring demand" in China and India (In fairness I think, given current market conditions, Mr. Brodrick should have another chance to re-evaluate that "rip-roaring demand" statement).

The fact is that back in April, there was ZERO economic data to support the $200/barrel oil predictions.

[John Michlig]

I sincerely hope you're correct.

[J. Strupp]

I think we all do.

My concern is that crude oil/gasoline spreads are extremely wide right now. This was the case before the hurricanes. I haven't seen current inventory data yet but my guess is that the gasoline futures are way out of whack too considering the significant drop in fuel consumption world wide as of late. You should see gas prices drop like a stone this winter, barring another major refinery shutdown. We'll see.

[J. Strupp]

...and now we have steadly rising oil and gas inventories even though refineries are shut down for seasonal maintainance. Couple that, with the global economic crisis, which has destroyed global demand for crude oil across the board, OPEC's lagging response to cutting global oil production and the steadily strengthening dollar. Add to that the increases in crude oil supply from new oil infrastructure coming online in Canada and the northcentral U.S. and you can look for below $50/barrel crude by Christmas.

Hope the gas stations kept their "1's" because sub $2.00 gas in on it's way back.

Can't see any end in sight either.

Just a guess of course.