Oil soars, but drivers need not worry yet
NEW YORK -- Oil prices are soaring again, but motorists don't need to worry -- yet.
The price of crude has jumped 22 percent since the beginning of October and is nearing $100 a barrel. For most of the summer, oil prices drifted lower on fears that the U.S. was headed toward another recession. But those concerns have started to wane as the economy stabilizes. Political tensions in the Middle East, which produces 29 percent of the world's oil, also have helped drive up crude prices at the fastest clip since February.
So far, the big jump hasn't translated into a surge in prices at the gasoline pump. Gasoline has crept up less than 1 percent, or 3.1 cents, to $3.41 per gallon, over the same period.
That's partly because people drive less once vacations wind down after Labor Day. This year, Americans have also bought less gasoline because of the weaker economy. That lackluster demand has kept prices in check, even as oil soars. If crude continues to rise, however, gasoline eventually will be forced to follow.
"Enjoy it while you can," said Ben Brockwell, pricing director at the Oil Price Information Service. "We may be in for a spike" in the spring. Brockwell expects gasoline prices -- which peaked at $3.98 per gallon on May 5 -- to flirt with $4 per gallon early next year.
As signs emerge that the U.S. isn't headed for another recession, the price of oil has risen. When economies improve, demand for oil goes up.
At the same time, some of the world's biggest sources of oil appear to be increasingly at risk. Iran, the world's fourth-largest oil exporter, is suspected of developing nuclear weapons, according to a United Nations report released Tuesday. Its nuclear program could lead to international trade sanctions, and Israel has threatened military action.
And in Nigeria, one of the top five oil exporters to the U.S., production continues to be hampered by spills, sabotage and thefts of its crude.
Meanwhile, the world's thirst for oil continues to grow. Developing nations in Asia and the Middle East have been importing more barrels as they build factories and their people buy more cars. The Organization of Petroleum Exporting Countries said Tuesday that global oil demand should rise to a record 92.9 million barrels per day by 2015. That's up 1.9 million barrels per day from the previous forecast.
OPEC said it was making the change to reflect a "swifter than expected" recovery in energy demand since the recession.
Oil prices have climbed from $79.20 a barrel at the beginning of October to $96.80 Tuesday. The last time they rose that swiftly was in the spring, when rebels in Libya started to clash with forces loyal to Moammar Gadhafi. Oil shot up 25 percent to $105 from February to March as the rebellion cut off Libya's exports, increasing pressure on already-tight world supplies.
Pump prices in the U.S. are increasingly influenced by oil produced in foreign countries, and those varieties haven't risen as sharply as the U.S. benchmark crude. Refineries that make gasoline also are producing cheaper winter fuel blends for this time of year.