Could U.S. Gas Prices Rise Above $5 Per Gallon? -
Investors -- certainly U.S. stock investors -- would be wise to keep one eye on the goings-on in Washington, and one eye on the price of oil, currently pushing $100 per barrel, once again.
Oil, as measured by West Texas Intermediate crude, Friday closed up 68 cents to $99.81 per barrel.
Moreover, the price of crude is considerably higher if the price of Brent Crude is used. Brent is considered a more-accurate reflection of current price conditions, due to a surplus of West Texas Intermediate oil at the Cushing, Oklahoma storage facility, which has lowered its price. Brent Friday closed up $1.16 to $118.67 per barrel.
And the reason why one should keep an eye on oil's price is obvious enough: once again, oil is approaching the danger zone, from a U.S. GDP growth standpoint.
No one knows precisely at what point oil begins to substantially hinder consumer spending and slow commercial activity - but this much is known: every $1 per barrel rise in oil decreases U.S. GDP by about $100 billion per year and every 1 cent increase in gasoline decreases U.S. consumer disposable income by about $600 million per year.
To be sure, the flexible and resilient U.S. economy is more-energy efficient today that it was 10 years ago - even five years ago -- and it will likely become more efficient in the years ahead, but that doesn't blot-out the fact that the U.S. remains an oil-dependent economy. Most cars still run on gasoline, trucks on diesel, and oil is also a major fuel for heat. Hence, sustained, high oil prices translate in to bagdthings for U.S. GDP, corporate earnings growth, and by extension, for most U.S. stocks.
Read more -
http://www.ibtimes.com/articles/185472/20110722/gasoline-gasoline-prices-gas-oil-oil-prices-crude-oil.htm
Investors -- certainly U.S. stock investors -- would be wise to keep one eye on the goings-on in Washington, and one eye on the price of oil, currently pushing $100 per barrel, once again.
Oil, as measured by West Texas Intermediate crude, Friday closed up 68 cents to $99.81 per barrel.
Moreover, the price of crude is considerably higher if the price of Brent Crude is used. Brent is considered a more-accurate reflection of current price conditions, due to a surplus of West Texas Intermediate oil at the Cushing, Oklahoma storage facility, which has lowered its price. Brent Friday closed up $1.16 to $118.67 per barrel.
And the reason why one should keep an eye on oil's price is obvious enough: once again, oil is approaching the danger zone, from a U.S. GDP growth standpoint.
No one knows precisely at what point oil begins to substantially hinder consumer spending and slow commercial activity - but this much is known: every $1 per barrel rise in oil decreases U.S. GDP by about $100 billion per year and every 1 cent increase in gasoline decreases U.S. consumer disposable income by about $600 million per year.
To be sure, the flexible and resilient U.S. economy is more-energy efficient today that it was 10 years ago - even five years ago -- and it will likely become more efficient in the years ahead, but that doesn't blot-out the fact that the U.S. remains an oil-dependent economy. Most cars still run on gasoline, trucks on diesel, and oil is also a major fuel for heat. Hence, sustained, high oil prices translate in to bagdthings for U.S. GDP, corporate earnings growth, and by extension, for most U.S. stocks.
Read more -
http://www.ibtimes.com/articles/185472/20110722/gasoline-gasoline-prices-gas-oil-oil-prices-crude-oil.htm
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