Oil has likely seen its summer peak
The average price of a gallon of gas has shot up by about a dollar since January. But a new Saudi Arabian oil field is just one big reason consumers won't see prices climb any higher this season. Steve Henn reports.
An offshore oil platform (Marcel Mochet/AFP/Getty Images)
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Steve Chiotakis: While gas prices are still off of their highs from last Summer, oil prices have been on the rise again. They're up the past month at the fastest clip in a decade. And that means the subject of oil prices is likely to come up when President Obama visits Saudi Arabia this week. Here's Marketplace's Steve Henn.
Steve Henn: Since January, the average price of a gallon of gas has shot up by about a dollar.
James Hamilton: Americans buy about 140 billion gallons of gasoline a year.
Economist James Hamilton's at UC Santa Barbara:
Hamilton: So each dollar a gallon rise in the retail price takes $140 billion in spending power.
Out of the economy. And the economic impact can be even larger as consumers put off big purchases like new cars.
But Ruchir Kadakia at Cambridge Energy Research Associates says this year, drivers don't need to worry:
Ruchir Kadakia: They've probably seen the peak of what they are going to see at the pump over the summer.
One reason: Saudi Arabia will bring an enormous new oil field online this month. And Kadakia says the Saudis have no interest in another oil shock.
Kadakia: The danger to them is that the price move so high that the world would have weaned itself off of oil.
And they'd prefer for their international customers to remain addicted.
I'm Steve Henn for Marketplace.
Comments
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06/02/2009
What if the dollar drops further relative to other currencies?
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