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Bad News for Consumers: Oil Closes Above $100

Gas prices spurt up in response

By Joe Benton
ConsumerAffairs.com

February 20, 2008

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Gasoline prices are on the move all across the country as the price of oil closed above the $100-a-barrel mark for the first time ever, hitting $100.01.

The record price is bad news for consumers and the U.S. economy alike, indicating a new record price for gasoline is not far away, topping the old national record of $3.23 set May 24, 2007.

The cost of a gallon of regular gasoline jumped 2 cents overnight, climbing to $3.05 a gallon. Gas prices are up 9 cents in the past week.

One month ago regular gasoline sold for$3.01 a gallon and one year ago a gallon sold for $2.26.

Gasoline futures are rising almost as fast as oil prices with gasoline for March delivery jumping 4.4 percent to a record $2.60 a gallon.

International oil traders are concerned that the Organization of Petroleum Exporting Countries will reduce oil supplies, adding to the frenzy that produced the record $100.01 a barrel price.

Analysts suggest the oil price hikes will add to inflation, making a recession more likely as the U.S. economy struggles with the mortgage industry meltdown.

Twice in the last two months, crude oil has hit the $100 mark but has fallen back before the closing bell.

The cost of crude oil has jumped 15 percent since the start of 2008 and consumers are now paying more as a result.

Gasoline prices almost always rise in spring as the refineries that make the fuel cute back production for maintenance and repairs.

Last year, the national average for regular gas climbed $1.09 during the spring to hit $3.23 per gallon.

The agency forecasts that oil supplies will be tight enough to push the national average gas price past the record set last May at $3.23 a gallon.

Gasoline prices are already up 75 cents a gallon over a year ago. The average price of a gallon of regular self serve is now $2.99.

Last month a gallon of regular sold for $3.05 and last year regular gasoline cost $2.24.

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