Monday, January 03, 2011

Will gas hit $5 a gallon in 2011 or 2012?

Gasoline prices may reach $5 or $6 a gallon during the latter half of 2012, according a Shell executive. But other pundits say that speculators are already bidding up the price of crude oil, toward $100 a barrel, and that a retreat, similar to what happened on 2008, is likely. But the 2008 crash may have precipitated the yo-yo effect on oil prices and oil company shares, as XOM dropped from the 90’s to the 50s. Right now, XOM is at $73. In 2011 or 2012, hopefully the same negative influence won’t exist.

Threats of solar activity (or even EMP attacks from terrorists) could materialize, but they could precipitate efforts by homeowners and businesses to harden their own electric infrastructure. One irony, one possible strategy could be more use of natural gas, which, however, requires electricity to be used by homeowners “safely”. More homeowners could be encouraged to install solar panels and Bloomberg boxes, but technology needs to be developed to shield the local infrastructure.

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