Some experts believe current oil price activities are leaning towards $100 a barrel status for the warmer months of 2011. This could mean, in certain parts of the US, $4 a gallon prices at the pump this summer. The experts cite a global economic rebound that sent prices surging 34 percent since May.
The United States remains the world’s largest oil consumer but doesn’t hold all the blame for the hike in prices. The rising demand for oil in developing countries, especially China, has been deemed the most likely reason for the rise in the black crude’s worth. Compared with the United States’ projected growth forecast of 1%, China’s oil consumption is expected to rise 5% next year.
The New York Mercantile Exchange witnessed standard oil prices enter into 2011 at $91.38 per barrel. Before closing out 2010 the NYME would see prices reach $92.06, the highest price for oil per barrel since Oct. 6, 2008. The American people are, on average, seeing a price of $3.072 per gallon.
Gasoline expert Fred Rozell believes 15 states will see gasoline prices top $4 a gallon by Memorial Day. “A dollar more per gallon isn’t that much – probably about $750 more per year for each motorist, but there’s a psychological aspect to gas prices,” Rozell continues, “People are going to be up in arms about this.”
This massive oil demand has continued to fill the pockets of big business oil with substantial profits. BP excluded, Exxon Mobil Corp., Royal Dutch Shell, Chevron Corp. and Total posted combined profits of $59.7 billion in the first nine months of the year, a 49% increase from the year before, as full year profits are expected to reach $81 billion.
Analysts speculate British Petroleum BP, held responsible for the largest offshore oil spill in U.S. history and penalized $39.9 billion in charges related to the disaster, will still earn $20.2 billion in 2010 with exclusions towards special expenses like the Gulf of Mexico spill.
“There’s nothing this industry can’t survive,” Oppenheimer & Co. analyst Fadel Gheit.
With China’s oil demand on such a wave of consistency, The Organization of the Petroleum Exporting Countries (OPEC) is unlikely to raise output in order to lower the cost per barrel. In 2008 oil supply pressures preceded the price spike that soared oil prices to $147 a barrel.