Opinion Brief

Is $100-a-barrel oil here to stay?

Trouble in the oil-rich Arab world is pushing prices higher and higher. Will oil ever be cheap again?

Crude oil prices shot back above $100 a barrel this week, as the war in Libya and unrest throughout the Middle East stoked fears of a disruption in supply. And with the still-fragile recovery just beginning to strengthen in the U.S., demand is only expected to increase and push prices higher. Is there any hope oil prices will drop soon? (Watch a discussion about the rising cost of oil.)

What goes up doesn't always come down: "This latest oil price spike may not be as temporary or 'speculative' as once thought," says HybridCars.com. Demand isn't just growing in a rebounding U.S. China's oil consumption is expected to rise 14 percent by 2015, which is good reason to expect that $100-plus per barrel crude may be here to stay. With gas already near $4 a gallon as the summer driving season approaches, it might be time to look at a more fuel-efficient car.
"This time around, higher oil could be here to stay"

The market will bring prices down eventually: Higher crude prices push up gasoline prices, says Dave Kansas at The Wall Street Journal. At some point, that starts "crimping consumer confidence." Gasoline will be expensive when the summer driving season hits, and American consumers will feel it in their wallets. High energy prices will thus cool demand, which will ease prices. And then the whole up-and-down cycle will start over again.
"When will rising energy prices start to pinch?"

Actually, $100 oil will seem cheap soon: Trouble in Egypt, Libya, Tunisia, and Saudi Arabia pushed oil to $108 a barrel this week, says John D. Markman at ETF Daily News. Now growing unrest in Yemen will propel it on the next leg of its upward journey. And if China's emerging middle-class consumers "come to use the same amount of oil per capita as their American counterparts," we'll need to find "the equivalent of seven Saudi Arabias to supply them." That would make $100-a-barrel oil a relic of the good old days.
"Rising oil prices: Is Yemen next?"

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