Energy Dept.: Gas Prices To Stay High

Oil Prices Soar As Fuel Inventories Fall More Than Expected; Gas Prices Hit $4.05

(CBS/AP)  Motorists can expect gasoline prices around $4 gallon through next year, the Energy Department said Wednesday, with oil prices staying well above $100 a barrel.

Crude oil prices are likely to average $126 a barrel in 2009, $4 higher than this year, as oil supplies and demand are expected to remain tight, Guy Caruso, head of the department's Energy Information Administration, told a House hearing.

Gasoline prices are likely to peak at $4.15 a gallon in August and won't go down much after that, the agency projected in a report. Gasoline was forecast to average $3.92 a gallon through 2009.

The agency said that the high price of gasoline has reduced expected demand for this summer, but not enough to dampen prices.

Caruso told House members that new auto fuel economy requirements and the increased use of ethanol and other alternative fuels are expected to produce "a substantial reduction" in oil use and oil imports over the next two decades.

Predicting future oil and gasoline prices is highly uncertain with the volatile global oil markets, Caruso acknowledged. The agency projects oil prices declining to $86 a barrel in 2010 and then increasing to $107 by 2015.

Overall U.S. oil consumption is expected decline over the next two decades because of the production of more fuel-efficient cars and the growing use of ethanol as a motor fuel, Caruso said. Both were required by Congress last December.

Crude prices, meanwhile, soared Wednesday well above Caruso's projections as his agency announced that U.S. oil inventories fell more than expected last week. Light, sweet crude for July delivery jumped $4.50 to nearly $136 a barrel on the New York Mercantile Exchange.

Light, sweet crude spiked up nearly $5.50 to $136.80 a barrel soon after the report's release, then retreated to trade up $3.06 at $134.37 a barrel on the New York Mercantile Exchange.

The dollar's travails again sent oil prices rising. The euro bought $1.5539, up from $1.5449 Tuesday. Oil prices have closely tracked dollar moves; prices rose sharply last week when the dollar fell, then retreated more than $7 earlier this week as the dollar gained ground.

"It's been hand in hand with what the dollar's been doing," said James Cordier, president of Tampa, Fla.-based trading firms Liberty Trading Group and OptionSellers.com.


Many investors buy commodities such as oil as a hedge against inflation when the dollar falls. Also, a weaker greenback makes oil less expensive to investors dealing in other currencies. Many analysts believe the dollar's protracted decline is the primary reason oil prices have doubled over the past year.

The EIA said oil inventories fell by 4.6 million barrels last week. Analysts surveyed by energy research firm Platts expected a much smaller decline of about 1.4 million barrels.

But other elements of the report were considered bearish for prices, and pulled oil off its earlier highs. Supplies of gasoline and distillate fuels such as diesel and heating oil both rose last week, and demand for gasoline fell by 1.3 percent.

Retail gas prices, meanwhile, rose to another record Wednesday, rising 0.9 cent overnight to a national average of $4.052, according to a survey of stations by AAA and the Oil Price Information Service. Prices continue rising, despite falling demand, because the price of oil keeps moving higher.

While oil prices have slipped some from last week's trading record of $139.12 a barrel, analysts say gas prices still have some catching up to do, and could rise another nickel or so. Of course, if oil futures blast past that record and reach new highs, gas prices will likely rise even higher.

Also supporting oil prices Wednesday was Royal Dutch Shell PLC's decision to extend force majeure on some Nigerian oil shipments, a legal declaration that means the company can't meet contractual obligations to supply some customers. The company first made the declaration following a militant attack in April.

CBS' The Early Show anchor Harry Smith spoke to Ray Carbone, an oil trader and broker at Paramount Options, about just who trades oil in financial markets and how much impact that activity has on the price of crude and, by extension, gas.

"We buy and sell oil. I trade options on the oil futures market. We're watching the price and all of the components that go into making that price up," Carbone said.

[hypnotoad72]

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/01/06/ccoil106.xml

I don''t often read outside-US information, but that final paragraph makes even me wonder "Why are politicians saying we need to drill more at home when we sell it elsewhere anyway?"

[neocon60]

THE YEN UP,THE PESO UP,THE EURO UP- THE US DOLLAR DOWN THE PLUG HOLE HA,HA,HA

Posted by underdogus1 Im affraid you are right underdogus1 the collapse of the US dollar will reduce America to a level of chaos and poverty...

[hoseobama]

mexinvasion - Congress has done nothing to solve the oil dependency problem for over 30 years.

It is time to replace every single one of them (House and Senate) that is up for re-election. I don''t care which party they are in. And two years from now, if we''re not happy, do it to the next set of Representatives that are up for election, and in four years the next set as well as Senators.

I say it is time for Americans to DEMAND their representation start representing them and stop worring about their jobs - because they don''t get to keep the job unless WE THE PUBLIC are happy.

If they are worried about saying in power - LET''S GIVE THEM SOMETHING TO BE WORRIED ABOUT!!!!!

[underdogus1]

THE YEN UP,THE PESO UP,THE EURO UP- THE US DOLLAR DOWN THE PLUG HOLE HA,HA,HA

[mexinvasion]

We the American public are paying for this nonsense. We the American voters can make Congress pay for this by voting all of them out of office this fall. Maybe its not really their fault. Lets vote them out anyway. An all new Congress might be willing to work harder to solve problems.

[captanahab]

If our USA of the past, that was forced to ramp up industrial levels and employ millions of home front citizens and win a World War with in 4.5 years....don''t you think with the our advancements of todays industry and technology we the people could built several( or what ever it takes)Nuclear plants to gain our energy independence and give our citizens a reasonable life style, what''s good and what is needed for the many IS MANDITORY instead of just CATERING for the selected few. IT IS TIME FOR US TO DEMAND WHAT IS RITE AND WHAT IS NEEDED AND BULL SH*T WITH THE THE PARTY LINES IN THE SENATE AND THE CONGRESS THAT IS BLOCKING OUR FUTURE.

[captanahab]

Isn''t it amazing, that the Energy Information Administration and the Energy Dept couldn''t for see ths energy crisis and yet has the current foresight to guarrentee that HIGH oil and gas prices for the next two years And yet there is no mention of a emergency 3 to 4 year building program for Nuclear power plants that could cut our oil useage by 50%

[forthepeopl1]

SO NOW THE FIRST LADY IS USING THE AMERICAN TAX PAYERS CREDIT CARD!!!!

NICE AMERICANS STARVING,LOSEING THEIR HOMES,AND OUR GREAT LEADERS STILL GIVEING BILLIONS TO COUNTRYS THAT HIDE BIN LADEN, AND WILL NOT LET US GO INTO THE HILLS TO GET HIM.



U.S. first lady Laura Bush told participants at the conference that the United States would contribute more than $10 billion in aid. She said donor countries must not turn their backs on Afghanistan, saying the country has reached a "decisive moment" for its future.

Germany has also announced it will give $653 million toward redevelopment efforts in Afghanistan over the next two years. Norway has pledged $730 million over the next five years.

U.S. Secretary of State Condoleezza Rice said Wednesday the United States will deliver its aid over two years. She acknowledged that there are concerns about corruption in Afghanistan, but she said she believes President Karzai understands the corrosive nature of corruption and is looking for help.

I THINK ALL AMERICANS SHOULD BE ASKING FOR DONATIONS DONT YOU.

[bobnjersey]

["who has the biggest government of them all? "

Bobby boy, You assume too much. Not all of us are like you, yes they are not only my thoughts, but it is the truth. Trying to assume that I am on one side of the isle like you mr free thinker? huh?]
[Posted by bretster7 at 06:30 PM : Jun 11, 2008]

looks like you''re suffering from your own references to ''assuming too much''.

and as expected ... you didn''t answer the question ... didn''t support your ''truth'' ... don''t have anything to support what is simply ... ''your version of your truth'' ... just claim it to be so ... and all should now bow to your wisdom.

[libh8er]

You bedwetting lib whiners are too much! Cuba can sell drilling rights to China to drill 90 miles off the coast of FL and that''s ok with you. Only America can''t. You f**king people are pathetic!

[forthepeopl1]

SO NOW THE FIRST LADY IS USING THE AMERICAN TAX PAYERS CREDIT CARD!!!!

NICE AMERICANS STARVING,LOSEING THEIR HOMES,AND OUR GREAT LEADERS STILL GIVEING BILLIONS TO COUNTRYS THAT HIDE BIN LADEN, AND WILL NOT LET US GO INTO THE HILLS TO GET HIM.



U.S. first lady Laura Bush told participants at the conference that the United States would contribute more than $10 billion in aid. She said donor countries must not turn their backs on Afghanistan, saying the country has reached a "decisive moment" for its future.

Germany has also announced it will give $653 million toward redevelopment efforts in Afghanistan over the next two years. Norway has pledged $730 million over the next five years.

U.S. Secretary of State Condoleezza Rice said Wednesday the United States will deliver its aid over two years. She acknowledged that there are concerns about corruption in Afghanistan, but she said she believes President Karzai understands the corrosive nature of corruption and is looking for help.

[shanev137]

Ironic how the US Energy Department all the sudden knows that gas will be over $4 until the end of 2009...but a few months ago they couldn''t tell us it was going to be over $4. If it does peak at $4.15 and stay there then we''ll know that the feds have some control over gas prices.

[tootall10142]

I think evetually we will be forced to drill in alaska,the wild life wont matter much bythen we will be eating itI hope every major car manfacture in the world is forced to close and retool from the ground up.by the eay hows that union thing working out for you guys?

[killtheliars]

"The agency said that the high price of gasoline has reduced expected demand for this summer, but not enough to dampen prices."

In other words the laws of supply and demand will only effect the price when it causes it to go up. If demand is reduced we are still going to keep the price around $4.00.
Why do I have a feeling that the minutes from Cheney''s secret energy meetings have statements about $4.00 a gallon gas.

[kristin1228]

"Energy Dept.: Gas Prices To Stay High" - yeah no sh*t, i didn''t need a news article to tell me that.

[cockapoo10]

Big companies can''t afford to play buying and selling games. They''re not special op oriented. Big companies have to rely on costs that don''t change.

[cockapoo10]

And even if its over, its that reliability you''re paying for.

[cockapoo10]

Most smart companies hedge. The markets nowadays are too risky. Too much politics at play. Its bad business. With a hedge you can count on a reliable cost, and thereby more reliable numbers.

[cockapoo10]

"Don''''t hedge funds and institutional investors manipulate the market on derivatives all the time and when they do they manipulate both up AND down?"

Even Chryslers get''n in on the hedging idea, selling their 2.99 a gallon gas cards. And a lot of the smart airlines hedged all their fuel too. Buying it at a higher price anticipated a sharp increase.

[patriot12436]

With this article i think we also need a new energy department.