Today’s gasoline prices, while higher than normal for this time of year, could end up looking cheap come springtime, says one prominent oil analyst.
Pump prices nationwide for regular unleaded could hit an average of $3.25 to $3.75 a gallon early next year on higher crude oil prices and a seasonal rise in gasoline demand, Tom Kloza, senior oil analyst with the Oil Price Information Service predicts.
“My view of 2011 suggests that we are looking at the second fuel price apocalypse of the 21st century, commencing during a time line that will begin with spring training and end when the Cubs are written off as a baseball non-contender,” Kloza writes....
...Prices will begin to rise early next year amid a surge of money moving into oil futures from investors anticipating the typical springtime rise in fuel demand, Kloza observes.
And:“ The spring move will be helped in part by fundamentals, but money flow is the performance-enhancing drug for prices,” he writes.
While the U.S. oil refining industry has recently seen profits improve as fuel demand pulls out of a recessionary slump, it still faces major challenges ahead, according to a new study by Deloitte.
Refiners, though they closed several plants during the downturn, still need to eliminate 1 million to 2 million barrels of processing capacity in order to achieve long-term profitability, said Roger Ihne, a principal with the consulting firm and author of the white paper “Changing Times: What’s Next for U.S. Refiners?”
That’s because legislation calling for a tripling of the amount of biofuels in the fuel supply, coupled with rising auto fuel efficiency standards, could cut demand for petroleum-based gasoline by up to 20 percent over the next decade, he said. Greater adoption of electric vehicles or those that run on compressed natural gas could cut still deeper into gasoline demand....MORE