Crude-oil prices briefly hit a record high of $100 a barrel Wednesday on the new year’s first trading day, signaling the prospect of higher energy costs for consumers and businesses.
Gasoline and diesel are expected to follow the rise in crude prices, which have almost doubled in the past year.
Aspen-based energy economist Phil Verleger said retail gasoline prices could reach $4.50 a gallon by this spring or summer, when seasonal demand increases.
“It’s going to be ugly,” Verleger said.
The national average for self-service regular Wednesday was $3.05; Colorado’s average was $2.83, according to AAA. One year ago, the Colorado average was $2.21.
Crude-oil futures for February delivery rose $4.02 early Wednesday to exactly $100 a barrel when a single trader bid up the price on the New York Mercantile Exchange. The index later fell back to close at $99.62.
Analysts attributed the increase to rising global demand for petroleum; fears of supply disruptions in Nigeria, Iran and other exporting hot spots; and the U.S. government’s diversion of some oil to fill the Strategic Petroleum Reserve on the Gulf Coast.
Denver-based petroleum analyst and investment banker Tom Petrie said the rise to $100 was “more symbolic than anything else,” although he said the record suggests a new year of pricing volatility.
“We’re in uncharted territory,” said Petrie, vice chairman of Merrill Lynch, which acquired Petrie Parkman & Co. last year. “Global demand for oil is strong, and we’re testing a higher top in prices.”
Petrie said an expected slowing this year in the U.S. economy could help offset some of the rising demand in China, India and other countries but probably not enough to significantly bring down prices. However, he said crude prices could be volatile this year, swinging up and down by as much as $40 a barrel.
“You have to expect to see increases in wholesale (fuel) prices,” said John Kingston, global director of oil for research firm Platts. “Unless those numbers pull back, that will have an impact on retail fuel.”
Oil prices now are within the range of inflation-adjusted highs set in early 1980 after the Iranian revolution. Depending on how the inflation adjustment is calculated, the $38-a-barrel high in 1980 would be worth $96 to $103 today.
Shares of United Airlines parent UAL Corp. dropped the most in almost two years Wednesday, leading a fall among U.S. airline stocks on fears of rising jet- fuel prices. UAL, whose United is the second- largest carrier, slid $3.67, or 10 percent, to $31.99.
Steve Raabe: 303-954-1948 or sraabe@denverpost.com
