Oil and Gasoline Prices: What the Hell?

The question that begs to be asked, what's driving oil prices up, and how high will they go in 2011?

The answer, we were somewhat cushioned in 2010, it's demand, and it will likely hover around $100/bbl for most of the next year.

That would mean the average price at the pump will settle in around $3.00-$3.20 a USG. Not the $5.00/gal hardship we saw a couple years ago, but not good either. The market price of crude oil, it's 55-57% of the cost of gasoline. That percentage has risen in the past several years, as the cost of oil has risen, but the costs of production, refining and marketing have been relatively stable.

A colder winter, and demand in emerging markets (China) mean it likely will not settle back into the $70/bbl range for the coming year.

In this economy, strangling exploration and production exacerbates an already bad situation. Which of course the Obama administration has carried on in earnest since his inauguration, most recently his disastrous post-BP gulf drilling moratorium.

It's enough to make Maxine Waters nationalize the oil industry.

posted by Dave In Texas at 10:06 PM

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