Inflation was already hurting Americans’ wallets at the gas pump. And now, the Ukraine disaster could drive these costs even greater.
Dan Dicker, a longtime oil and power markets strategist, warns that gas costs could soar as excessive as $7, as the value of crude oil continues to rise with an absence of worldwide funding in provide and geopolitical tensions overseas.
“My guess is that you’re going to see $5 gas at any triple-digit [oil price], as soon as you get to $100. You might get to $6.50 or $7 at $120 or $130 [per barrel],” Mr. Dicker advised Yahoo Finance Live. “Forget about $150 [per barrel], I don’t know where we’ll be then.”
Mr. Dicker, the founding father of The Energy Word, mentioned it’s laborious to foretell a timeline for such prices however that the value per barrel has already risen sooner this 12 months than he beforehand anticipated.
“This kind of fundamental growth in the oil market,” he mentioned, “it’s hard to stop this train.”
The present nationwide common for a gallon of standard gas was at $3.52 as of Thursday, in line with AAA. That’s a rise of 16.5 cents per gallon from one month in the past and 97.2 cents greater than one 12 months in the past, per GasBuddy.
The value of WTI crude oil opened at $90.90 per barrel on Thursday, up greater than 58% from $57.25 one 12 months in the past.
The saber rattling in Eastern Europe is simply anticipated to make issues worse. With a feared invasion of Ukraine by Russia, specialists have sounded the alarm bells that such a geopolitical battle would create ripple results by additional constraining provide from Russia’s oil manufacturing and thus taking pictures up costs additional.
Russia is the world’s third-largest producer of petroleum and different liquids, in line with the U.S. Energy Information Administration, producing a median of 10.5 million barrels per day. That’s about 10% of the international oil manufacturing.
“The Ukraine dust-up has added fuel to the fire on energy prices,” Mr. Dicker mentioned. But he added that Ukraine isn’t the cause why costs have already escalated so rapidly over the previous 12 months. An absence of funding in provide is the important offender, he mentioned.
“What’s happened over the course of the last four or five years and even longer is a lot of supply destruction has gone on, where a lot of these producers can’t really respond to the increasing demands for oil,” Mr. Dicker mentioned. “Right now, we’re not sure if anybody can supply any fresh supply into this market, no matter where prices go.”