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Oil & Gas Prices Reach New Highs - But Could Go Much Higher

March 11, 2008 02:00 PM
by findingDulcinea Staff
U.S. gas prices broke another record this week, hitting an average of $3.22 a gallon.  Some experts believe oil prices could go significantly higher.

30-Second Summary

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Oil prices rose to $108 a barrel Monday and analysts predict $110 a barrel or higher is possible, “given that the usual rules of supply and demand aren't driving the oil-price party train,” writes the Los Angeles Times.

Oil, a global commodity, is traded throughout the world in dollars, and the dollar is dropping in value, causing prices to rise in dollar terms.

The Goldman Sachs Group Inc. analyst who predicted a $105-a-barrel spike back in 2005 has a new prediction: oil as high as $200 a barrel due to “a future rebound in U.S. gross domestic product growth or a major oil supply disruption.”

And the surge comes just months before the summer driving season, which could push prices even higher.

Some believe rising oil and gas prices in recent years could be a symptom of a bigger problem with dire consequences.

The term “peak oil” refers to energy resource depletion as a result of the peak in global oil production. Oil is a finite resource, and some theorists believe that its peak production has passed and can only decrease from now on.

In 2005, multi-billionaire investor Richard Rainwater predicted a rapidly approaching peak oil crisis, and invested heavily in the oil sector.

“But there may be something more important than making money,” he said in a Fortune magazine story. “This is the first scenario I've seen where I question the survivability of mankind.”

Headline Links: Oil and gas prices soar

Reference: Peak oil

What does ‘peak oil’ mean?
When a well’s oil production is plotted on a graph against time, the bell-shaped parabola that is produced is called the Hubbert curve, after U.S. geologist M. King Hubbert. In 1956, Hubbert accurately predicted that the production of oil in the United States would peak between 1965 and 1970.

Reference: The diesel problem

Background: Past oil peaks and ways to save money

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