Just in time for the holidays! That dreaded double-dip recession prophecy may indeed be fulfilled! Why? Gasoline at the pump is topping $3 a gallon. (And, rising right before motorists' eyes!!!) The "scare point" in upstate New York is $3.25 for the cheapest grade. Once prices rise beyond that, consumers begin cutting back in order to keep gas in their vehicles. The shopping malls (retailers) will immediately feel this, and it looks like the timing is "just right" -
Crude-oil futures hit a fresh two-year high in European trade Tuesday, helped by a weakening of the dollar.
The front-month December contract on the New York Mercantile Exchange was trading 48 cents higher at $87.54 a barrel, off its high of $87.63 earlier in the session. The front-month December Brent contract on London's ICE futures exchange was recently up 41 cents at $88.87 a barrel, after earlier hitting a six-month high of $89.02.
Oil prices surpassed $87 per barrel after the Federal Reserve announced a $600 billion injection into the U.S. economy, causing the U.S. dollar to lose value, thereby pressuring oil and gasoline prices higher, according to Patrick DeHaan, GasBuddy.com Senior Petroleum Analyst.
DeHaan says that in addition to the Fed's actions, a Department of Energy report indicated another drop in U.S. supplies against rising demand. He said that with oil prices breaking out of their well established $75-$85 a barrel range, prices could trade in a higher range, perhaps $85-$95 a barrel for several months, signaling higher gasoline prices in the future.
Like a lump of coal in your stocking, $3 per gallon gasoline is threatening to make the holidays a little less merry.
And then, there is this ::: "...gasoline prices were set to go up last week even before the Federal Reserve unveiled its next economic stimulus plan — to create $600 billion to spend on treasury bonds over the next eight months. The Fed’s goal is to introduce more money which banks would then lend out. In the mean time, however, it has caused the dollar to drop in value and made commodities, such as crude oil, more expensive.
International demand, especially in China, also could have played a role in gas prices, said Anthony Grisanti, president and CEO of Grz Energy, a trading firm in New York.
For one thing, Chinese consumers lately have been buying more cars and using more gas. Also, China has started importing diesel again, Grisanti said. The last time that happened was during the Beijing Olympics in the summer of 2008 — the same time gas prices in the Chicago area set a record of $4.34 per gallon."