Oil Prices Jump; Gas Prices Will Rise

By: Associated Press
By: Associated Press

Oil prices rose past $92 a barrel on Monday to a 26-month high, as the new year began with the prospect of higher energy prices to come.
Benchmark oil for February delivery rose 72 cents to $92.10 a barrel in midday trading on the New York Mercantile Exchange after hitting $92.66 a barrel earlier in the day. The last time oil settled above $92 a barrel was on Oct. 3, 2008, when it reached $93.88.
At the pump, the national average for regular gasoline was about $3.07 a gallon on Monday, according to AAA, Wright Express and the Oil Price Information Service. That's 3 cents more than it was a week ago and about 41 cents higher than a year ago.
Drivers in Illinois, California and New York are paying some of the highest prices, ranging from $3.15 to $3.67 a gallon. The cheapest gas is largely in the Rocky Mountains, South Carolina and Missouri, where gas stations charge from around $2.81 a gallon to $2.92 a gallon.
Oil has been gaining ground on speculation that the global economy will continue to grow in 2011. Many analysts expect the price for oil to reach at least $100 a barrel this year, which will mean higher prices not only for gasoline, but for diesel and heating oil as well.
A $10-per-barrel increase in the price of oil will cost consumers an additional $200 million a day for all energy products, Cameron Hanover energy analyst Peter Beutel said. That means less money available for other things, from clothing to electronics.
Analysts think there may not be much to keep oil prices from moving higher after a strong finish in 2010. "The biggest problem with 2011 is that there are very few easily identifiable reasons why oil prices might move lower for any extended period -- other than a renewed recession," Cameron Hanover said in a research report. Most economists don't think that's likely.
Fresh economic data on manufacturing activity and construction spending on Monday helped push oil and gas prices higher.
The Institute of Supply Management said manufacturers produced more goods and booked more orders last month, leading to the fastest growth in factory activity since May. Automakers, computer and electronics companies and industrial machinery firms were especially strong.
Manufacturing has been one of the strongest performers since the recession ended in June 2009, and the latest report suggests that is likely to continue in coming months.
In Europe, economics analysis firm Markit reported Monday its purchasing managers' index for manufacturers in countries that use the euro hit an eight-month high last month as stronger production growth and new orders lifted job creation.
Separately, the Commerce Department said construction spending increased 0.4 percent in November, the third straight month of gains. Building activity remained 33.2 percent below the all-time high in March 2006, when spending was driven by a record boom in housing.
In other Nymex trading in February contracts, heating oil gained 3.83 cents to $2.5807 a gallon, gasoline rose 1.92 cents to $2.4495 per gallon and natural gas added 13.9 cents to $4.561 per 1,000 cubic feet.
In London, Brent crude rose $1.05 to $95.80 a barrel on the ICE Futures exchange.

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  • by Anonymous on Jan 4, 2011 at 05:24 AM
    These prices took some of my grocery money,and trips to doc will be less and many other things less.Prices are all greed.It don't hurt the true rich so who cares about us small fixed incomes.Social security ones,low waged folks or who ever hasn't enough money plus pay bills like those NOW that winter is here.This hurts the economy.The little guy will cut back,but the rich guy won't cover what we usually pay.hurts economy.Those allowing these prices are not thinking.Seeing dollar signs is what it is all about.Now that there are more R in office we can watch many prices go up and up.Prices like this stop many from buying other things.How does that help?Interest rates going up as well.How long before we do go into a real depression?
  • by Greg Location: Lansing on Jan 3, 2011 at 01:37 PM
    This is a really old article about pre purchasing gas online. (SEE LINK BELOW)... I think it is funny how fuel prices had been predicted to exceed $7.00 a gallon by 2010... http://milliozine.com/new-service-lets-us-drivers-save-on-gas-by-offering-fixed-price-gasoline With the China & Russia buying up all the Fuel futures, grain futures from the USA companies & Farmers for 2012 its only obvious the prices will go sky high for the american consumer. $4.00 by Summer 2011, and $5.00 per gallon by 2012. Supply & Demand lesson coming up this year. Happy New Year.
  • by VaVel Location: Lansing on Jan 3, 2011 at 09:55 AM
    I hope it gets to $10.00 a gallon. With the outsourced jobs everywhere but the U.S., perhaps a depression is what is needed. The corporate profit margins, CEO bonuses will abruptly halt. There will be no one to buy there products but the workers making $2.00 hr. to purchase their big ticket items. I will simply greet them on the soup line and smile.
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