Gasoline prices have done the unthinkable and broke the $4.00 per gallon national average. Americans are now spending more than $1.5 billion dollars per day on fuel to start the month of June . That is over $1 Billion dollars more than what was spent just 5 years ago.
Crude oil is the driving force pushing prices higher. Crude recently stormed to $140 per barrel and some traders are predicting that WTI could go as high as $200 per barrel before the summer ends. Some experts are blaming the financial markets, claiming that the price increase is based on speculation.
With stocks flat lining and the real estate market plummeting, many hedge funds and investment houses have turned to commodities as the investment of choice. As food and energy prices break new
records, more dollars are invested in oil as a safe hedge against inflation.
Very few people are willing to sell into a runaway market resulting in large upward swings.
According to some oil economists, we are experiencing a bubble similar to the housing market and tech stock bubbles. Unfortunately there is little consensus on when the bubble will pop or how inflated it will get before it bursts. Even as demand is off by nearly 3%, many experts don’t expect to see relief at the pump until after the hurricane season ends in the fall.
It is worse for fleets that buy diesel fuel. The national average is only 25 cents per gallon away from breaking $5.00 and supplies are worrisome. Globally, diesel is the fuel of choice and many refiners are exporting the product to places outside the country where the profits are more lucrative.
