MarketWatch.com reports this afternoon that the price of a barrel of crude oil increased by $2.25, reaching a one-year high of $81.37. The “front-month contract,” as followed by the New York Mercantile Exchange, is the highest price since last October.
According to the Energy Information Administration, the national average price for a gallon of regular gasoline rose almost nine cents to $2.57 a gallon:
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Despite the recent decline in food prices, the U.S. Department of Agriculture (USDA) says they’re expecting that economic recovery will cause food prices to rise as the end of the year closes in. Compared with last year, food prices are down almost all the way across the board.
According to a report by the Economic Research Service of the USDA, grocery prices fell 0.5% in July from June, and have fallen 0.9% from the same period last year. However, the USDA is predicting that falling prices will give way to increases of 2-3% by year’s end:
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Oil is regarded as a volatile commodity because its cost has the ability to fluctuate greatly within a short period of time. Last July prices soared to record highs of over $141 a barrel, only to fall off to nearly $30 a barrel last December. After oil prices reached their peak, a massive pull off in consumer demand caused prices to fall. The experts say that with consumer demand still low, the price of oil could stand to drop even further below its current price at near $60 a barrel. One analyst has even predicted oil to touch down briefly at $20 a barrel:
Philip Verleger, a business professor at the University of Calgary and visiting fellow at the Peterson Institute for International Economics told CNBC’s July 8 “The Kudlow Report” how the cost of oil might drop. Verleger explained why the current price of oil – at $60 a barrel, off its $72 highs, is still way too expensive for the market and why it could come tumbling down to $20.
Hyundai is leading the auto-incentive pack once again. Beginning tomorrow, the South Korean automaker will launch their “Assurance Gas Lock” promotion, an incentive that will offer new vehicle buyers either a $1,000 cash rebate or the chance to lock in gas prices at $1.49/gallon for one year:
With gas prices at $2.70, someone driving a V6 Hyundai Sonata, one of its most popular models, for 12,000 miles over the course of a year would save about $580 with the gas price promotion, given the Sonata’s EPA-estimated 25 miles per gallon fuel economy in combined city and highway driving.
Gas prices ended a 54-day rally yesterday, as the national average price for a gallon of gasoline fell three-tenths of a cent to $2.69. The easing continued today, as the national average fell another penny to $2.68.
While analysts are warning that the dip in price isn’t enough to suggest a turnaround, the easing has temporarily halted a run-up in prices that has reminded some consumers of what they endured last summer:
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The news that gas prices are still climbing comes as no surprise to those of us who drive:
Gas prices rose Friday for the 45th consecutive day as summer travelers hit the highways and refineries hold back on fuel production.
That’s not altogether surprising; oil closed at over $72/barrel today. Like all goods, gas is subject to the economic law of supply and demand, just as we learned in school. However, demand isn’t climbing the way it usually does during the spring driving season:
Oil futures rose this morning on the news of an improving job report and a strengthening dollar. Oil prices topped out at $70.32 a barrel, the highest level recorded in six months. Futures quickly receded back to between about $67 and $69 a barrel:
Gas prices have been increasing steadily for the last couple of weeks as we approach the inaugural weekend of the “driving season”. You don’t have to be an expert to know that the summer driving season brings more than just congested highways. While the cost of gasoline is certainly escalating, we’re far from the record-setting prices of last summer:
But while pump prices have increased nearly 17% over the last 24 days, and are likely to go even higher over the coming weeks, experts don’t foresee anything like the record levels of 2008.
Buying a new car is now going to cost you extra — $1,300 extra by 2016. President Obama announced new fuel and emission standards today in Washington. According to the president, the new standards are expected to lower our dependence on foreign oil, increase fuel efficiency, and reduce the amount of harmful emissions caused by automobiles. He also said the standards are a win-win for both states and automakers:
Obama said the proposal would save 1.8 billion barrels of oil over the lifetime of the vehicles sold in the next five years, akin to removing 177 million cars from the roads over the next 6 1/2 years.
AutoNation’s CEO Mike Jackson seems to think so. But before you light the torches and summon the pitchforks, hear him out. Granted, you still may disagree, but he makes a valid point.
In a recent interview with Fortune’s Carol Loomis, Jackson said that establishing a “revenue-neutral gas tax” would help establish a floor under gas prices at about $3.50-$4.00 a gallon. Jackson insisted his strategy of taxation in order to establish the price floor shouldn’t begin until after the economy recovers.
If your first thought is “is this guy crazy?”, I’m sure you’re not alone. But Jackson is the CEO of the nation’s largest auto retailer, and if high gas prices adversely affect anyone, it’s him.
