West Texas Intermediate crude hit $100 a barrel briefly Thursday, a rise at least in part attributed to an apparent settlement for the Greece debt crisis. But despite the return of rising prices, the International Energy Agency has said it won't release more reserves, as it did in June when member nations made 60 million barrels available. Crude dropped to $90 back then, so the recent rally is an 11% increase.
Another factor in oil prices: China's manufacturing activity has slowed, as evidenced by recent PMI data.
In this country, though Labor Day weekend is not far away. Between now and then, we'll see the traditional surge in travel that envelopes August and ends with the holiday. The price of gas has begun to rise ever so slightly, and that surge may well accelerate if crude remains high.
The AAA Fuel Gauge reported that the average price of a gallon of regular reached $3.689 Thursday, up from $3.637 a month ago. Prices are highest in some of the most populated states, such as California, New York, Illinois, Connecticut, and Massachusetts. Premium prices have moved back toward $4: The national average is $3.938.
The price of gasoline usually lags the price of oil. If that pattern holds true, consumers can expect higher gas prices later this summer.
There is potential good news for gas prices, though. However, it's the silver lining in a big, ugly raincloud. The U.S. economy has slowed nearly to a halt. Consumer spending and consumer confidence have sputtered. Housing activity has remained moribund. The economy added only 18,000 non-farm jobs in June and the July number could be worse. It is a horrible analysis, but while rising oil could push gas prices higher, the economic slowdown could send them right back down again.
Gas Prices Creep Up as Oil Hits $100