Oil Soars Above $100 Barrel

Will rising crude oil prices pinch drivers at the pump?

Will rising crude oil prices pinch drivers at the pump? (wikipedia.org)

We imagine we’re no different than the average driver, which means for the most part, we’re never happy when we fill up our tanks with gasoline. Unless of course, we’re paying less because fuel prices are on a downward trend, as they have been since they peaked right before the start of summer.

Despite the falling prices, we’ve expected an increase in gasoline prices for a few reasons, including the Thanksgiving holiday being just a week away from today and increased demand for gasoline, as American consumers continue to travel via automobile at ever-increasing rates. And yes, we still think travelers are in for sticker shock at the pumps next weekend.

What we weren’t expecting was the price of crude oil hitting a five month high, which it did yesterday, closing at over $100 a barrel for the first time since July. At the end of trading yesterday, U.S. crude oil prices had risen by $3.00 to $102.59. Brent crude closed at $111.67. The gains in prices represent oil making a complete recovery from the slide they’ve been experiencing throughout summer and autumn.

David Lee Smith of The Motley Fool believes oil could continue this rise until it hits $200 a barrel in 2012. He notes that there are four factors that could lead to the massive increase, including:

  • ExxonMobil drilling inside Iraqi’s Kurdistan region.
  • The effort by Iran to develop nuclear weapons.
  • Potential for Iraqi civil war.
  • U.S. troop withdrawal from Iraq.

Smith wrote that “The Middle East and North Africa — and especially the all-important Iraq-Iran-Saudi Arabia region — remain very much a tinderbox, with the potential to drive crude prices to stratospheric levels.”

According to the United States Energy Information Administration, crude oil makes up 63 percent of the cost we pay for a gallon of gasoline. Thus, if current crude oil pricing continues moving higher, gasoline prices will soon follow suit.

About Cecil Helton

Cecil Helton Cecil Helton is a U.S.-based writer and editor with passions for cars, motorcycles, boats, technology and social media. Much of his professional life since 1996 has been web-centric, and he’s written and developed content on a variety of subjects. His work in the houseboat industry received wide acclaim, such as winning the 1999 Cisco Systems Growing with Technology award and being named one of five finalists in the manufacturing sector of the 2000 Computerworld-Smithsonian Awards. As an Air Force brat, he spent much of his childhood in a two-year cycle of moving to a new place, making new friends, establishing a life, and then moving again. Destinations included: Kentucky, Illinois, Texas, the Greek isle of Crete, California and Ohio. Today you’ll find Cecil coping with his 15 year old son’s decision to pursue a motorcycle license at the same time he gets his driver’s license, being active across the web on multiple social media sites, and of course, writing articles and creating content on automotive and car insurance related topics right here at CarInsurance.org.

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