I'll have some analysis on the other side of this excerpt:
LONDON (Reuters) - Oil is headed straight to $100 a barrel, Venezuelan President Hugo Chavez said hours after prices surged this week to an all-time high near $79.For the record, the futures market is betting that prices will drop, and while I concur, notice a trend that develops here: each peak is higher, each floor also rises, and longer-term, the floors are rising faster than the ceilings:Some of the heaviest hitters in the commodities markets have predicted that, even without adjusting for inflation, gasoline will hit $15 a gallon in 1995 dollars within eight years (adjusting for inflation, the actual price you'll pay would probably be somewhere in the neighborhood of $23 a gallon). And lest you think I'm talking out of my hat:
But others remember the price collapses of the last four years and wonder if markets are headed for a repeat.
U.S. crude on Wednesday climbed to a record high of $78.77 a barrel, surpassing the previous peak of $78.40 reached in July 2006.[...]
Since 2003, the oil market has entered into a sharp correction phase after climbing to its highs for each year.
After reaching last year's peak, prices tumbled 36 percent in the following six months to below $50 a barrel.
Chavez is not alone in believing oil's rally will continue. Goldman Sachs said last month prices could reach $95 by the end of the year.It's hard to predict precisely what $100 a barrel oil will mean immediately for Americans. The correlation between crude and gasoline, for example, is less tethered than the correlation between crude and home heating oil. We see today, in fact, that oil at $79 a barrel has hardly budged gasoline prices upward, where oil at $65 a barrel back in April had prices at the pump well over $3 a gallon.
The perfect storm for Americans would be an oil spike in October. Even at $80 a barrel, refining capacity would be limited by physical production requirements: the shift to more environmentally-friendly winter blends of gas demands that refineries be shut down for retooling. And some of the crude, much of the crude, would be diverted for the imminent heating oil season. If global warming keeps the weather unseasonably warm in the fall in the Northeast, thus encouraging more people to drive later into the fall and winter, $4 a gallon at $80 a barrel would be likely. $5 a barrel in states like California and Massachussetts would be reachable.
$75 just to fill up a Toyota Corolla, $150 to fill up an SUV, will bring home the crisis to Americans in a way they'd never imagined.