Oil and gasoline prices have risen to their highest levels in two years, and analysts say prices could shoot up dramatically this year as the thirst for fuel grows in the U.S. and around the world.
The former head of Shell Oil has warned that gas prices could hit $5 a gallon by 2012 because of fast-growing demand in emerging countries such as China and India, where more and more people are buying cars, combined with restraints on drilling in the U.S. in the wake of last year’s disastrous Gulf oil spill.
Less-worrisome forecasts are calling for a rise in gas prices to $3.75 a gallon by spring from today’s $3.07 average level, with premium crude prices easily exceeding $100 a barrel this year as demand for oil around the world returns to pre-recession levels last seen in 2007.
“We’ll definitely see $100 oil,” Carl Larry, president of Oil Outlook and Opinions, told Platts Energy Week TV last week. “The way things are going — the cold weather, supply issues — $100 oil is inevitable and it’s on its way.” Higher gas prices will follow the lead of oil, as they usually do, he said.
Premium crude prices surged to nearly $92 in New York trading last week before falling back to end at $89.18 at the close of trading Thursday.
Mr. Larry said the spike in energy prices is being driven by robust growth in oil consumption in Asia as well as steadily rising demand in the U.S., which remains the world’s largest consumer of oil.