‘Optimism’ Is Driving Energy Prices, Consumers Will Suffer The Memorial Day Hangover, Says Consumer Watchdog
Oil, Gas Prices Rising Again At Record Clip For Holiday, Despite Oversupply, Low Demand, Says Group
Washington, D.C. — The price of regular gasoline at the pump has shot up
30 cents a gallon nationally in the last month and crude oil has nearly
doubled, to $60 a barrel, since its low point in December, according to
data from AAA and the federal Energy Information Administration.
Steeply rising prices are tough on everyone except energy traders, said
Consumer Watchdog.
The price spike at the pump amounts to a holiday frat party for
energy traders and oil companies, with drivers paying for the kegger,”
said Judy Dugan, research director at the nonprofit, nonpartisan
Consumer Watchdog. “A one-month pump price increase of 15% can only
undercut the rest of an economy struggling to show any sign of
long-term recovery.”
Analysts cite optimism that U.S. motorists will drive a little more
this Memorial Day weekend, expectations that the economic slump has hit
bottom and, harking back to mid-2008, the possibility that Nigerian
violence will cut oil output. There is very little hard evidence of
increased demand, said Consumer Watchdog.
The record spike in oil and gasoline prices in late 2007 and the first
half of 2008 helped send the U.S. and world economies over a cliff,
said Consumer Watchdog. Even a smaller spike at this low point of job
loss and financial fragility will hurt consumers, curbing more
economically productive spending. Food prices are also rising in tandem
with oil, though at a slower pace.
“When energy and food prices rise while workers are making less money,
the recent little bursts of consumer optimism are likely to turn sour,”
said Dugan. “Right now, the only people at the party are the energy
speculators. And consumers will suffer a hangover in the family budget
as the price of oil’s wishful celebration.”
Consumer Watchdog noted that a doubling of oil prices in five months is
rare in even the recent history of oil prices, especially in the
absence of a global oil supply crisis or widespread natural disaster.
For instance, a barrel of oil cost in the $30 range on the U.S. spot
market in June 2003, and did not reach a sustained price over $60 a
barrel until August of 2005, as Hurricane Katrina brewed. It was over
two years later, in late October 2007, that it increased even 50% above
that level to $90 a barrel. (Click here to see the Energy Information Administration history of WTI spot prices at Cushing, OK.)
“The U.S. and world economies are at the mercy of the post-2007 roller
coaster in energy prices, with dangerously steep peaks and valleys,”
said Dugan. “Consumers deserve a holiday after the last couple of
dismal years, and pump prices aren’t making it easy.”
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Find out more at: www.OilWatchdog.org and www.ConsumerWatchdog.org