Oil prices may top $50

| 8/6/2004

Crude oil prices could reach $50 a barrel by the end of the year.

That’s the consensus of various analysts in the United States and other countries, quoted recently by several media outlets and financial journals.

Leo Drollas of the Center for Global Energy Studies told The Associated Press that cold weather this winter could drive up demand, adding to the upward pressure on prices.

Floyd Upperman, an Ohio commodity trading adviser, told The New York Times he doesn’t see “anything stopping it from going to $50 in the short term.”

In part, the forces that analysts say could drive oil that high are the same ones that have set one oil price record after another this week.

Many analysts have attributed recent record-high prices to troubles involving the Russian oil company Yukos, which is currently engaged in a battle with the Russian government. The company’s leader, Mikhail Khodorkovsky, a political foe of Russian President Vladimir Putin, is currently charged with tax evasion and fraud. The company is also facing massive payments for back taxes.

Oil prices shot up last week on news that the Russian firm might stop production.

The situation in Moscow was compounded when wire services reported that an OPEC official said the multinational oil producers’ organization could do little to slow the increase in prices.

Crude oil hit record levels Monday and Tuesday, Aug. 2 and 3, running more than $43 a barrel both days on the New York Mercantile Exchange. On Thursday, Aug. 5, it was heading that direction again.

As the raw materials were rising in price, the finished product was running up as well.

The Department of Energy reported Aug. 2 that the national average U.S. retail price of diesel fuel had increased to $1.780 from the previous average of $1.754. Regional prices ran from as high as $2.115 a gallon in California to $1.717 in the Lower Atlantic region, the lowest in the nation.