"A dollar more per gallon isn't that much--probably about $750 more per year for each motorist, but there's a psychological aspect [image-nocss] to gas prices," the director of business development and retail pricing at the Oil Price Information Service (OPIS), told the news agency. "People are going to be up in arms about this."
(Click here for additional research from Wall, N.J.-based OPIS, a source for petroleum pricing and information, on gasoline prices.)
Flying, shipping a package and ordering a pizza all likely would get more expensive in the new year if the price of oil rises and companies pass along higher energy costs. Some economists say rising energy prices will slow economic growth.
The U.S. is the world's largest oil consumer, but prices since spring have been on a roll primarily because of rising demand in developing countries, especially China. China's oil consumption is expected to rise 5% next year; that compares with less than 1% growth forecast for the United States.
Benchmark oil for February delivery rose $1.54 on Friday to end the year at $91.38 per barrel on the New York Mercantile Exchange. It reached $92.06 earlier in the day, the highest since October 6, 2008. Nationwide gasoline pump prices now average $3.072 per gallon.
Higher oil prices have fattened oil company profits. Excluding BP PLC, the four other major investor-owned oil companies posted combined profits of $59.7 billion in the first nine months of the year, a 49% increase from the year before. Exxon Mobil Corp., Royal Dutch Shell, Chevron Corp. and Total SA are expected to earn $81 billion for the full year.
The fifth oil giant, BP, was held responsible for the largest offshore oil spill in U.S. history and booked $39.9 billion in charges related to the disaster. Excluding special expenses like the Gulf of Mexico spill, analysts say the company will still earn $20.2 billion in 2010.
"There's nothing this industry can't survive," Oppenheimer & Co. analyst Fadel Gheit told AP.
The price of energy and other commodities shifted into high gear in late August when Federal Reserve Chairman Ben Bernanke signaled that the central bank was prepared to
stimulate the economy by buying government bonds. The $600 billion program didn't start until November, but speculators had already starting bidding up the value of asset classes like oil.
A further oil price spurt came in late November as it became clear that Congress was likely to extend for two more years tax cuts set to expire at the end of the year.
The Organization of Petroleum Exporting Countries (OPEC) is capable of raising output, if it needs to, by more than five million barrels per day. Still, Morgan Stanley estimates that the rising energy needs of China and other emerging economies will consume about half of that amount over the next two years. That could create supply pressures similar to those that preceded the price spike of 2008, when oil soared to $147 a barrel.
John Hofmeister, former president of Shell Oil and author of "Why We Hate The Oil Companies," predicted that Americans will pay $5 per gallon for gasoline by 2012. (Click here for previous CSP Daily News coverage.)
Other experts say that is a long shot. "That means oil close to $200" per barrel, analyst and trader Stephen Schork said. "We can see it, but we could also see a global depression, too."
And Gulf Oil and Cumberland Gulf Group CEO Joe Petrowski recently said that the price of crude oil could hit nearly $150 per barrel by Memorial Day. (Click here for previous coverage.)
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