Business World

COLUMBUS, Ohio–Oil and gasoline prices continued a recession-defying march higher yesterday, doubling in six months on optimism of a strengthening U.S. economy.

Predictions for just how high oil can reach this year, like in 2008, continue to creep upward, just five months removed from when crude priced around $32 (U.S.) per barrel.

Benchmark crude for July delivery rose $1.23 to settle at $66.31 a barrel on the New York Mercantile Exchange.

The pump panic of 2008 has yet to surface, but that’s not to say there haven’t been some double takes.

Wholesale gasoline prices, which typically rise during this time of year, are up a staggering 140 per cent since Christmas Eve. Retail gasoline prices have hit a U.S. average of $2.467 a gallon. American pump prices have jumped 20 per cent in the past month alone.

In Canada, the price at the pump averaged $1.009 (Canadian) per litre, up from 89.8 cents per litre a month ago, but down from $1.33 per litre a year ago, according to website GasBuddy.com.

Crude prices have spiked 30 per cent this month, enough to give anyone vertigo. But the pain is relative.

This time last year, crude prices were brushing up against $130 (U payday loans no faxing.S.).

Crude has risen fast, but we’re still only hitting around $66.

For U.S. gas prices to hit $3 a gallon, crude would need to go to about $100 a barrel, well above even the highest projections this year of $70 to $75, said Tom Kloza, publisher and chief oil analyst at Oil Price Information Service.

Still, many analysts, including Kloza, have been surprised by the run-up in gasoline.

"If you had asked a month ago if we would see a $2.50 national average, I would have said `no.’"

The jump in energy prices has not been fuelled by demand, but by a belief that demand will rise at some point. That has created momentum in a market that does not have the fundamentals to support it.

With demand for gasoline running flat to slightly below last year’s levels, unemployment moving higher, and ample inventories and refinery capacity, it is hard to see prices get much higher from here, said Adam Sieminski of Deutsche Bank.

"We’ve climbed out of the depths, but it’s still not growing on a year-over-year basis," he said.

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