Crude oil has risen 52% from its December 19th low of $33 a barrel to $50. Can gasoline prices be far behind?
What's behind the move? Supply is down. For example, Kuwait and Qatar indicated they will implement the supply cuts that OPEC announced last month. A dispute between Russia and Ukraine reduced natural gas shipments to Europe -- it must be cold there. And Iran is calling for a suspension of crude exports to Israel's allies as the conflict between the Israeli army and Hamas hits its 11th day.
Will demand fall further as prices rise? That seems to be the only hope for a reversal in the price of oil. But so far there seems to be a bit of a delay between the rising price of crude and the price of gasoline. So if you're paying $1.66 now it looks like $2 won't be too far away. Maybe it's not too late to look into buying energy stocks.
Peter Cohan is president of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter
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Reader Comments (Page 1 of 1)
1-06-2009 @ 12:13PM
Dan Barnett said...
Gas is up already. 7 cents by the official survey. 6 cents at the stations I regularly use.
Heard good things about Marathon Oil lately.
1-06-2009 @ 12:25PM
Iridium said...
Whoo hoo another BS run up in the price of oil based on nothing but pure greed.
Oil surplus everywhere and a lack of demand should push prices down but not in the wacky world of Wall Street. Here the laws of economics have no merits, only who wants to influence the price of what.
If production cutbacks cause a shortage then prices could go up but there are no signs of this.
1-06-2009 @ 1:33PM
nick said...
Ok DIRTY HARRY REID what are you going to do now, you got the warning sign that oil is on it's way up. It's about time you and Obama get off your ass and pass a bill to let the folks drill for our oil on the west coast and in Alaska. You got to forget about those left wing nuts like Barb Boxer and Finestein, and the rest of the people in SORA's back pocket. If the nut job governor in California wants tax payer money let the oil flow out there and get a cut of that. No what is Dirty Harry Reid and Durbin doing, they are getting with Obama to hit us with a dollar a gallon tax to pay for these stupid road projects. Obama will have the next 300 years of debt being paid by folks who will be in third world status, but they will remember the second President Harding real well.
1-06-2009 @ 2:53PM
william lindblad said...
Buying into this run up will be a fool's paradise. It is all about speculation being caused by the strife in Gaza. I think all should keep in mind that Israel does not like falling rockets and that they don't like long term occupations either. They have never been very effective with ground war.
If anything, nothing will change.
1-06-2009 @ 9:06PM
banzaigtv said...
OH HELL NO!!!!!!!!! When gas prices start raising like this, fuel demand will head towards ABSOLUTE ZERO by February!!!!! Everyone will begin selling their cars in favor of bicycles, buses, scooters, and such while expecting $5 gas this summer. The gasoline era is now ending!!! 20% of the songs in my iPod are now gone, I am immediately returning to consumption habits exercised when gas was $4 last summer, 50 mph on highways, no mall trips until further notice. I had a half tank of gas left, but I filled it up before it's too late. Everyone, STOP BUYING GAS NOW!!!!!!!!!!!!!