BALTIMORE, March 19 /PRNewswire/ -- The approaching Easter holiday may be among the last of its kind. Gas prices are touching a national average of $3.28 per gallon, according to AAA and the Oil Price Information Service. Consumers already feel the pinch of rising fuel costs. But oil and energy expert Byron King believes travelers will be begging for current energy prices by this time next year.
"A gallon of gasoline in America today costs about 20 cents more than it did in May 2007... when oil cost only $65 per barrel," says King of www.energyandoil.com. Oil prices have soared since then, reaching a record high of $111 recently. "But the refiners have been eating much of that cost increase and accepting much smaller profit margins. So even if current oil prices retreat, U.S. oil refiners will sooner or later be forced to price gasoline based on those $100-plus barrels of oil."
That's bad news for American drivers. If gas prices catch up to oil's 70% rise since this time last year, national average prices at the pump could pass $5 per gallon and move near $6. "And what happens if oil prices keep rising -- which they inevitably will?" asks King. "Your next trip home for Easter dinner in 2009 could set you back $7-8 per gallon."
Motor fuel already costs up to $8 or so per gallon in Britain and Germany, although much of the price is fuel tax. A fill up in Europe can easily cost $100 or more. If gas were to double in the U.S. -- American fuel would still be cheap compared with the rest of the world.
According to King, "Politicians promise relief. But they really can't do a thing. Most of the world's oil is located outside of the U.S., and much of that is in places not known to be friendly with America. So if the U.S. wants to burn oil, it has to pay for it. And you cannot blame the refiners who do not want to run their operations at a loss. So high costs for oil will eventually be felt at the pump."
King's advice for traveling this holiday weekend? "Enjoy it while you can... the days of cheap gasoline are simply over."
Byron King is a contributor to www.energyandoil.com, as well as the editor of two acclaimed investment advisory newsletters, Outstanding Investments and Energy & Scarcity Investor. He is a trained geologist holding advanced degrees from Harvard, the University of Pittsburgh and the U.S. Naval War College and has worked in the exploration and production divisions of a major international oil company. He has been working, advising and analyzing the oil and energy industry for the past 30 years, and his expertise has been featured in print, radio and television outlets across the U.S.