Graphic by McClatchy Media.
Oil, Gas Prices Rising Again At Record Clip For Holiday, Despite Oversupply, Low Demand, Says Group
Washington DC — The price of regular gasoline at the pump has shot up 30 cents a gallon nationally in the last month and crude oil has nearly doubled, to $60 a barrel, since its low point in December, according to data from AAA and the federal Energy Information Administration. Steeply rising prices are tough on everyone except energy traders, said Consumer Watchdog.
“The price spike at the pump amounts to a holiday frat party for energy traders and oil companies, with drivers paying for the kegger,” said Judy Dugan, research director at the nonprofit, nonpartisan Consumer Watchdog. “A one-month pump price increase of 15% can only undercut the rest of an economy struggling to show any sign of long-term recovery.”
Analysts cite optimism that U.S. motorists will drive a little more this Memorial Day weekend, expectations that the economic slump has hit bottom and, harking back to mid-2008, the possibility that Nigerian violence will cut oil output. There is very little hard evidence of increased demand, said Consumer Watchdog.
The record spike in oil and gasoline prices in late 2007 and the first half of 2008 helped send the U.S. and world economies over a cliff, said Consumer Watchdog. Even a smaller spike at this low point of job loss and financial fragility will hurt consumers, curbing more economically productive spending. Food prices are also rising in tandem with oil, though at a slower pace.
“When energy and food prices rise while workers are making less money, the recent little bursts of consumer optimism are likely to turn sour,” said Dugan. “Right now, the only people at the party are the energy speculators. And consumers will suffer a hangover in the family budget as the price of oil’s wishful celebration.”
Consumer Watchdog noted that a doubling of oil prices in five months is rare in even the recent history of oil prices, especially in the absence of a global oil supply crisis or widespread natural disaster. For instance, a barrel of oil cost in the $30 range on the U.S. spot market in June 2003, and did not reach a sustained price over $60 a barrel until August of 2005, as Hurricane Katrina brewed. It was over two years later, in late October 2007, that it increased even 50% above that level to $90 a barrel. (Click here to see the Energy Information Administration history of WTI spot prices at Cushing, OK.)
“The U.S. and world economies are at the mercy of the post-2007 roller coaster in energy prices, with dangerously steep peaks and valleys,” said Dugan. “Consumers deserve a holiday after the last couple of dismal years, and pump prices aren’t making it easy.”
Find out more at: www.OilWatchdog.org and www.ConsumerWatchdog.org