Oil and Gas Prices Soar

September 7th, 2000

T rains, planes and automobiles will all feel the pressure as fuel costs continue to climb. That means it's going to cost us all more to travel or even to stay warm at home in the cold winter months ahead.

In the last couple of days, oil prices have hit their highest levels since the Gulf War. Prices had shot to nearly $35 per barrel by Wednesday afternoon. OPEC has already boosted oil production twice this year to try to stabilize prices, and has pumped over 600,000 barrels more since July. Even with these efforts, prices still are at a ten-year high.

Analysts are confident, however, that the price of gasoline could fall again if OPEC increases production. "I'm fully expecting that crude oil prices will drop once OPEC ministers meet," petroleum industry consultant Michael Ervin told the Globe and Mail, "But by how much is difficult to say, although they have gone on record as desiring the price of crude oil to trade at below $30 per barrel."

Saudi Oil Minister Ali al-Maimi affirmed that his country, one of the biggest oil producing countries in OPEC, has increased production, but told Reuters on Tuesday, "We must be extremely careful that efficiency is required by people running refineries. Eventually people will realize that the industry is living with less inventories."

Saudi Arabia's Crown Prince Abdullah echoed his minister's comments, but also added that taxation levels in countries that use oil also contributes to the high prices. "These taxes, which bear heavily on consumers, should be reconsidered," he said in an Associated Press article published Wednesday.

OPEC plans to meet on Sunday to consider a third production increase to try to stabilize the volatile oil market.

The cost of oil will force budget airlines and other transportation companies to raise ticket prices to accommodate higher operating costs. "You've got to face the music at some point," said Royal Airlines chief financial officer Roland Blais to the Globe and Mail. He said November 1 could be the day that Royal and two other discount airlines raise fuel surcharges. They presently charge approximately $15 a flight, which is factored into ticket prices.

Canadian gasoline prices soared yesterday in response to the rising price of crude oil, with the price in some markets reaching heights of 86 cents a litre, and no relief in sight. And heating bills may also see a price hike this winter, if oil prices stay at their present levels. "When consumers get their first bill, it's likely to be higher," Michael Ervin told the Globe and Mail.

How do high gas prices affect you?
Share your stories, vent some anger, and tip off fellow motorists on cheaper gas stations in the Sympatico-Lycos forums.

Related Links

OPEC Web site

Gas price guide
Find cheap gas prices in your city with these helpful resources in the Sympatico-Lycos Automotive section

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