Gas prices spiked ten cents this week when prices hit $3.19 a gallon.
“We’re kind of seeing a little bit of a combination of things when it comes to crude oil prices,” said Don Good of the Good Oil Company in Winamac. “It’s combination of the weak dollar, we’ve kind of talked about that crude oil is valued in dollars, so when we do something in our economy that makes the dollar weaker, like the $900 billion tax relief plan that added to the deficit, that made the dollar fall. Since the dollar is the currency that they value crude in around the world, it makes crude oil more expensive for us and less expensive for other countries. India’s and China’s economies have really picked up. I think they’re running at about a six or eight percent increase compared to where we are struggling. As a matter of fact, China just passed us as being the largest consumer of petroleum in the world. They’re consumption of oil is going up while ours is pretty stagnant. Right now the markets are focusing on their use than ours.”
Can we see the gas prices going higher?
“Unfortunately, I think for the short term, they will continue to edge up until some big economic news happens that might kind of cool the enthusiasm for petroleum,” replied Good. “A lot of the banks are starting to buy crude oil futures again which is driving those. If they perceive that the world economy is going to increase, I think we’re going to see it continue to climb. Now whether it will go back to the $4.00 mark or not, I’m hoping we don’t get up that high, but if the economy really does pick up, I think it’s possible.”
Good said we haven’t seen gas prices this high in two years.
“Actually it goes clear back to the start of the recession. Gasoline actually hit the $4.00 mark and, in my opinion, it actually triggered the start of the recession. We hit that $4.00 mark and started falling back and it broke the $3.00 mark roughly two years ago. It has stayed below the $3.00 mark pretty consistently since then so it’s been about two years.”