An Energy Information Administration (EIA) report released June 1, 2009, shows gasoline, on average, has gone up 47 cents a gallon since Easter. The next day, oil hit a seven-month high at close of trading. Despite positive economic signs, energy prices are heading back up.
While not close to the historic levels of last year, this price climb with the world economy not yet back to growth mode means energy costs to the consumers, and the fortunes of oil and natural gas companies, are going to continue up. OPEC is saying they would be comfortable with $70-$75 per barrel oil, and we are heading back there right now.
U.S. domestic exploration and production had slowed down after the large price drop for Oil and Natural gas last year, but the firming market makes US domestic supply plays look like a good bet moving forward.
Heating oil customers should be budgeting for higher prices over the winter.
The world is still a hydrocarbon based energy consuming system, and it will be for quite some time, so as demand ramps back up with the increase in economic activity, so will oil and Natural Gas prices. Can the fledgling economic growth trend sustain itself in the face of higher prices for Oil, Natural Gas, and Energy in general? How much of the economic slowdown of the last year was caused by higher energy prices?
This summer will an interesting test of those questions, as well as the resiliency of motorists in the face of climbing gasoline prices.
Source: Ronald Santicola, president of Convenience Development Corporation (Condevco), a consulting firm with an emphasis on convenience store and petroleum distribution.