Inquiring minds are watching oil prices race toward $100 a barrel, and looking at a report that says $4 per gallon gasoline is a certainty now in California. If this is true, then it will devastate The (Formerly) Golden State:
Some traders say $4 a gallon will be a reality in the not-too-distant future, and prices could shoot even higher. But that might be the exception rather than the average in the United States this year unless the Middle East unrest spreads to Saudi Arabia or another major oil producer, according to Thomas Kloza, chief analyst at OPIS.
“The edges of the country and the coasts will see higher prices than the interior of the country where they can use domestic and Canadian crude. I think the prices are going to top out at $3.50 to $3.75,” per gallon, said Kloza.
“I don’t think we’re about to embark on a launch pad for another 2008. We went up to $4.11 by the summer. We went to nearly $5 for diesel,” he said. He said the level where consumers start to feel real pain at the pump is about $3.80 to $4 per gallon.
At least it wasn’t all bad news:
Kloza expects other oil producers to make up for the loss of supply from Libya, which declared force majeure on oil production Tuesday. Kloza said there is about 5.5 million barrels of oil that major producers could put into production, the bulk of which would be from Saudi Arabia. Libya was producing 1.6 million per day and accounts for about 2 percent of global oil production.
SurvivingCalifornia.com’s suggestion is to begin to cut back on expenses now to help pay for gasoline bills in the near future.
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