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By JAD MOUAWAD
Published: January 2, 2008
Oil prices rose above the symbolic level of $100 a barrel for the first time on Wednesday, a long-awaited milestone in an era of rapidly escalating energy demand.
Crude oil futures for January delivery crossed the $100 threshold on the New York Mercantile Exchange shortly after noon New York time, before falling back slightly. Oil prices, which had fallen to a low of $50 a barrel at the beginning of the year, have quadrupled since 2003.
The rise in oil prices in recent years has been driven by an unprecedented surge in demand from the United States, China and other Asian and Middle Eastern countries. Booming economies have led to more consumption of oil-derived products such as gasoline, jet-fuel and diesel. Meanwhile, new oil supplies have struggled to catch up.
Oil markets have become increasingly volatile and unpredictable this year, with large swings that analysts attribute partly to financial speculation, not just market fundamentals. Political tensions in the Middle East, where more than two-thirds of the world’s proven oil reserves are located, have also fueled the rise in prices.
Gasoline has lagged the rise in the price of oil. It stands at a nationwide average of $3.05 a gallon for regular grade, the government reported Monday. That is below the all-time peak in May of $3.23 a gallon, but it is 82 cents higher than at this time a year ago. Some analysts worry that gasoline could hit $4 a gallon by next spring if oil prices remain at high levels.
Oil is now within reach of its historic inflation-adjusted high reached in April 1980 in the aftermath of the Iranian revolution when oil prices jumped to the equivalent of $102 a barrel in today’s money.
Unlike the oil shocks of the 1970s and 1980s, which were caused by sudden interruptions in oil supplies from the Middle East, today’s surge is fundamentally different. Prices have risen steadily over several years because of a rise in demand for oil and gasoline in both developed and developing countries.
writePost();
By JAD MOUAWAD
Published: January 2, 2008
Oil prices rose above the symbolic level of $100 a barrel for the first time on Wednesday, a long-awaited milestone in an era of rapidly escalating energy demand.
Crude oil futures for January delivery crossed the $100 threshold on the New York Mercantile Exchange shortly after noon New York time, before falling back slightly. Oil prices, which had fallen to a low of $50 a barrel at the beginning of the year, have quadrupled since 2003.
The rise in oil prices in recent years has been driven by an unprecedented surge in demand from the United States, China and other Asian and Middle Eastern countries. Booming economies have led to more consumption of oil-derived products such as gasoline, jet-fuel and diesel. Meanwhile, new oil supplies have struggled to catch up.
Oil markets have become increasingly volatile and unpredictable this year, with large swings that analysts attribute partly to financial speculation, not just market fundamentals. Political tensions in the Middle East, where more than two-thirds of the world’s proven oil reserves are located, have also fueled the rise in prices.
Gasoline has lagged the rise in the price of oil. It stands at a nationwide average of $3.05 a gallon for regular grade, the government reported Monday. That is below the all-time peak in May of $3.23 a gallon, but it is 82 cents higher than at this time a year ago. Some analysts worry that gasoline could hit $4 a gallon by next spring if oil prices remain at high levels.
Oil is now within reach of its historic inflation-adjusted high reached in April 1980 in the aftermath of the Iranian revolution when oil prices jumped to the equivalent of $102 a barrel in today’s money.
Unlike the oil shocks of the 1970s and 1980s, which were caused by sudden interruptions in oil supplies from the Middle East, today’s surge is fundamentally different. Prices have risen steadily over several years because of a rise in demand for oil and gasoline in both developed and developing countries.
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