Page 10 ■ Thursday, November 24, 2011


NATION & WORLD Oil hits $100/barrel


By CHRIS KAHN Ap Energy Writer


NEW YORK — Oil prices hit $100 per


barrel on Nov. 16 after a six-week surge that may drive gasoline prices higher in coming months and slow the fragile eco- nomic recovery. For now, there a few reasons to ex-


plain why oil jumped 30 percent higher since early October. One is promising. The U.S. economy


continued to show signs of strength, meaning that the thirst for fuel may grow.


The other factor is troublesome, as


concerns rise about potential disruptions to critical — and tightening — world oil supplies, including unrest in the key oil- producing areas of the Middle East and Africa.


The price run-up has led to increas-


ing numbers of investors, such as major investment funds, pension funds, money managers and other speculators, to fl ood back into commodities markets. “This thing is on fi re,” independent


oil trader Stephen Schork said. “Every- one’s gobbling oil up.” The benchmark oil price rose by 3.2


percent on Nov. 16 alone, ending the day at $102.59 per barrel, after a Canadian pipeline company announced it would ship crude away from a key Midwest delivery point. It was the fi rst time since July that oil rose above the $100 mark. So far, the jump in prices hasn’t pushed gasoline prices higher. Gasoline prices are being held in check because motorists are driving less than they did during the summer vacation season. Re- fi neries also are allowed to make cheaper winter fuel blends this time of year. Still, if oil holds above $100 per bar-


rel for long, gasoline will inevitably rise from a national average of $3.402 on Nov. 16. Analysts are already predicting pump prices above $4 per gallon in the spring. It’s tough to say how high oil will go. After a similar surge in the spring,


prices fell in April from this year’s peak near $114 per barrel on fears of another U.S. recession and as industrialized na- tions planned and later released emer- gency supplies. The springtime rise sharply curtailed


economic growth. Consumers had fewer dollars to spend on other goods because


“Mitchell’s is always seeking highly motivated employees.”


Associated Press


Mohammad Rezaie changes the gas prices at his Union 76 gas station in Oakland, Calif., Nov. 11. The price of oil is fl irting with $100 per barrel for the fi rst time since the summer, as fears fade that Europe’s debt crisis will spread and trigger another recession.


gas cost so much more. There was even talk of $5 a gallon. The national average hit $3.9845 per gallon on May 5. Consumer spending, which drives the


U.S. economy, nearly came to a halt. The 0.7 percent growth in the spring quarter was the slowest since the recession ended in June 2009.


“Consumers had to pull back on other spending to


fi ll up their gas tanks.” – Economist at Moody’s Analytics Ryan Sweet


“Consumers had to pull back on oth- er spending to fi ll up their gas tanks,” said Ryan Sweet, an economist at Moody’s Analytics. Americans are devoting more of their income to gasoline than ever this year. The Oil Price Information Service said that U.S. households have spent 8.4 percent of their income on gasoline, up from 6.7 percent in 2010 and 7.9 percent in 2008. A variety of factors since have pushed


oil prices above $100 again. ■ The U.S. bounced back from the


spring and appears to have avoided a recession: Over the past several weeks, economic reports have shown that con- sumers are spending more, and manu- facturing activity continues to grow. ■ Supplies are tightening: Crude


stockpiles have been falling this year in the U.S. The government said Nov. 16 that storage levels are 6 percent lower


than their 5-year average. They could fall further, given that a Canadian company inked a deal to send oil from a key Mid- west delivery point to the Gulf of Mex- ico, where much of it is expected to be refi ned and potentially exported to other countries. ■ Growing concerns about some of


the world’s richest oil producers: Iran, the world’s fourth-largest oil exporter, is suspected of developing nuclear weap- ons, according to a United Nations re- port earlier this month. Its nuclear pro- gram could lead to international trade sanctions, and Israel has threatened military action. Companies operating in Nigeria also said that oil production has been hurt by spills, sabotage and out- right thefts. Nigeria is one of the top fi ve oil exporters to the U.S. ■ Developing nations continue to demand more oil: China, India, Latin America and other developing regions of the world are burning more fuel as they build factories and their people buy more cars. The Organization of Petro- leum Exporting Countries expects world demand to increase from about 88 mil- lion barrels per day in 2011 to a record 92.9 million by 2015. ■ Investors are increasingly confi dent


that oil will go higher: Government data shows that speculators are mostly betting that prices will go up, not down. Intense interest from speculators tends to push oil prices higher, Schork said. “They’re just pouring money into this


thing,” he said. Because of the interest from speculators, it’s hard to say exactly when prices would fall. “You just have to wait for buying interest to dry up.”


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