Will Record-High Oil Prices Continue?
However, the EIA's forecast is $5 a barrel higher than last year's for 2008. That's because global demand has increased by 1.8 million barrels per day (bpd), while production has only increased 1.68 million bpd. In addition, the U.S. winter is forecast to be 4% colder than last year, causing an increase in U.S. heating fuel consumption.
What It Means to You
Higher oil prices generally translate into higher gasoline prices, and the EIA is forecasting gas prices to remain above $2.80 through 2008. Crude oil accounts for 55% of the price of gasoline, while distribution and taxes influence the remaining 45%.
Of equal concern is the impact of higher oil prices on inflation. According to the EIA, 96% of transportation relies on oil, 43% of industrial production, 21% of residential and commercial uses, and 3% of electric power. In addition, if oil prices rise, then so does the price of natural gas, which is used to fuel 14% of electric power generation, 73% of residential and commercial uses, and 39% of industrial production. (See Crude Oil Prices Definition and Forecast)
Comments
America has to borrow and tax more, just to pay off the interest on the money we already (over) borrowed. If you cut through the crap, and go back to simple basics, all economists agree that the first thing an individual should do to get their finances back into the black, is to pay off their credit cards, and get out from under paying the interest each month. The U.S. is no different. Instead of solving the problem by borrowing hundreds of Billions more, and assuming Billions more in interest, our first priority should be to pay off our loans, and stop paying all that interest on loans !!!
Hi Howard,
I agree that we should have paid off our debts, personally and as a nation, a long time ago. Then, if we needed the funds to handled an emergency like the one we are facing, we would have them.
Kimberly