U.S. gas prices poised to rise further

U.S. gas prices poised to rise further

High gas prices in the United States are bound to become higher if global demand for oil gets stronger and low supply persists, the American Petroleum Institute said Friday.

Gas prices increased 4 percent or 12 cents per gallon in the last month alone, the motoring association AAA said. The U.S. average is at $3.12 per gallon, about less than a dollar below the highest price on record. The past twelve months saw gas prices rise 14 percent or 39 cents per gallon. Crude oil price is presently under $90 per barrel.

The industry group did not specify gas price estimates for this year but it said the trend is still going up.

"Unless we see increases in supply, it's hard not to see a tighter market," the group's president John Felmy said in a conference call with reporters. He said global oil demand last year reached a record-high 87 million barrels per day. The high rate was lifted by robust growth from China, India and the Middle East.

But supply was affected by the moratorium in drilling after the BP oil spill and also by mitigating measures by OPEC and non-OPEC oil production not stepping up to fill the gap.

The moratorium in the Gulf of Mexico will cut production by some 120,000 barrels per day this year according to the Energy Information Agency.

But other analysts do not share the same opinion that supply is down and the gas price hikes are caused mostly to  increased investment in crude oil.

Posted by Sophia Andrews on Saturday January 22 2011, 4:00 AM EDT. Ref: CNN. All trademarks acknowledged. Filed under Featured News, Travel. Comments and Trackbacks closed. Follow responses: RSS 2.0