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Experts forecast relief for gas pains
Pump prices expected to fall
Question of the Day
The break in prices couldn’t come too soon for American consumers, whose free-spending ways have been hampered in recent months by the high cost of filling up.
A report from the Commerce Department on Thursday showed how purchases of gasoline are cutting into spending elsewhere. It found that retail sales rose by a seemingly solid 0.5 percent last month, but when gas sales were excluded, they inched up by only 0.2 percent.
Meanwhile, higher fuel prices accounted for three-quarters of a 0.8 percent jump last month in prices paid by producers, the Labor Department reported.
“The substantial pullback of crude-oil prices below the $100 a barrel mark should help alleviate some of the pressure,” said Gregory Daco, senior economist at IHS Global Insight. “This is welcome news for households.”
Some energy experts think the setback in gas prices will be short-lived at best.
John Hoffmeister, former president of Shell Oil Co., expects that after a brief respite, gas prices will surge to $5 in 2012, driven by burgeoning demand for oil around the world.
“We will see a slight tapering off, and that may continue through the summer,” because of the recent drop in oil prices, he told Platts TV. But after that, “I think we’re going to keep seeing global demand pushing gas prices up.”
Mr. Hoffmeister noted that Americans are “angry and discouraged” about high gas prices, and that has provoked the usual show of political gamesmanship on Capitol Hill.
Democrats are blaming “Big Oil,” and Republicans are blaming Democrats for blocking offshore drilling.
Mr. Hoffmeister said the Washington response is “typical of the failed policies of the last 40 years,” which have failed to find broadly supported, bipartisan solutions to the nation’s chronic energy shortages.
“We knew this high gas price was coming back, as sure as the sun comes up in the morning,” he said. “We knew global demand was catching up with global supply.”
The tight balance in global oil markets as nations like China and India consume more and more oil makes high gas prices “inevitable” unless the U.S. goes all out to open up and exploit its own available energy resources, he said.
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