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The Risk on Gasoline Prices

At Pumps, we try to monitor the range of forecasts on energy pricing. We emphasize how consumers might be able to interpret and use this news. Today’s article cites some of the concerns about rising prices and some fundamental analysis.

In the next few days we shall consider some alternative viewpoints, and suggest a strong consumer strategy.

The Risks

The rise in oil prices, even before the hurricane season, suggests a new plateau.

Goldman Sachs analysts fear a “superspike” to the range of $150- 200 per barrel.

“The possibility of $150-$200 per barrel seems increasingly likely over the next 6-24 months, though predicting the ultimate peak in oil prices as well as the remaining duration of the upcycle remains a major uncertainty,” Goldman said.

Goldman, which was one of the first to point to a triple digit oil price more than two years ago, said it believed the market was approaching the crunch in the “super-spike

In a similar vein, the Wall Street Journal noted the basic change in the balance between supply and demand. The article, Oil Exporters are Unable to Keep up with Demand, describes the problem as follows:

The world’s top oil producers are proving unable to put more barrels on thirsty world markets despite sky-high prices, a shift that defies traditional market logic and looks set to continue.

Fresh data from the U.S. Department of Energy show the amount of petroleum products shipped by the world’s top oil exporters fell 2.5% last year, despite a 57% increase in prices, a trend that appears to be holding true this year as well.


These fundamental considerations have influenced the forecasts of savvy market pros like T. Boone Pickens, who recently forecast oil at $150 and Sir Richard Branson, who sees $200 oil.

Next: An alternative viewpoint.

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