BP oil spill = higher gas prices?
source: http://www.examiner.com/x-47889-NY-Personal-Finance-Examiner~y2010m6d9-BP-Oil-Spill--Higher-...
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- AubreyClint
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The United States is currently experiencing the worst oil spill in history. On April 20th, a BP oil rig in the Gulf of Mexico exploded, killing 11 people, and causing environmental and economic damage to the entire Gulf region. Small business owners who rely on the Gulf waters for business and fishing are out of luck, since most of the Gulf waters are either closed or deluged with oil. Most of the wildlife, birds and fish have died and it seems as if there is no end in sight to this oil spill. BP still can’t stop the oil from spilling.
Will the BP oil spill cause gasoline prices to rise?
Oil/gasoline prices are not expected to rise immediately as a result of the spill, due to several reasons. First, the oil rig that exploded was an explanatory rig – we did not even know that there was a large supply of oil from this well. Secondly, the current supply for oil is high, a sign that prices will not increase.
However, oil prices are likely to rise towards the end of this year and into 2011, as a result of the current oil spill. This is because output will decrease due to the spill. The U.S. government expects oil supply from the Gulf waters to drop by 6.1% – this means about 26,000 fewer barrels of oil each day towards the end of 2010 and 70,000 fewer barrels per day in 2011! This decrease in output is likely to drive the price of oil up.
The Obama Administration has currently banned deep-water drilling – most of the oil from the Gulf of Mexico is derived from extremely deep waters. With this ban on deep-water drilling, the supply of oil will decrease, which could potentially cause the price of oil to increase.
In 2011, U.S. oil output is likely to fall by about 2% – not good news for gasoline prices! The current national average for a gallon of gas is $2.725.
Also, if the majority of the public begins to oppose offshore drilling as a result of the BP oil spill, oil prices could rise.
What are your thoughts on gasoline prices? Do you think gas prices will rise as a result of the BP oil spill? Share your comments!
http://www.examiner.com/x-47889-NY-Personal-Finance-Examiner~y2010m6d9-BP-Oil-Sp...
Will the BP oil spill cause gasoline prices to rise?
Oil/gasoline prices are not expected to rise immediately as a result of the spill, due to several reasons. First, the oil rig that exploded was an explanatory rig – we did not even know that there was a large supply of oil from this well. Secondly, the current supply for oil is high, a sign that prices will not increase.
However, oil prices are likely to rise towards the end of this year and into 2011, as a result of the current oil spill. This is because output will decrease due to the spill. The U.S. government expects oil supply from the Gulf waters to drop by 6.1% – this means about 26,000 fewer barrels of oil each day towards the end of 2010 and 70,000 fewer barrels per day in 2011! This decrease in output is likely to drive the price of oil up.
The Obama Administration has currently banned deep-water drilling – most of the oil from the Gulf of Mexico is derived from extremely deep waters. With this ban on deep-water drilling, the supply of oil will decrease, which could potentially cause the price of oil to increase.
In 2011, U.S. oil output is likely to fall by about 2% – not good news for gasoline prices! The current national average for a gallon of gas is $2.725.
Also, if the majority of the public begins to oppose offshore drilling as a result of the BP oil spill, oil prices could rise.
What are your thoughts on gasoline prices? Do you think gas prices will rise as a result of the BP oil spill? Share your comments!
http://www.examiner.com/x-47889-NY-Personal-Finance-Examiner~y2010m6d9-BP-Oil-Sp...
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