Thursday, January 03, 2008

Is $100-a-barrel oil good for Texas? State may get more jobs and business, but gas could reach $3.50 a gallon

By JIM FUQUAY - Fort Worth Star Telegram Staff Writer - Jan. 3, 2008
Surging energy prices create jobs in the Texas oil patch, but are they really good for the state?

Now that crude futures hit the $100 mark Wednesday for the first time, we'll find out.

"Consumers are staring at $3.50 gasoline, if not more," while higher energy prices tend to slow the economy and can especially hurt major industries like the auto business, says the chief economist of Frost National Bank.

A 2005 study by two Dallas Fed economists concluded that a 10 percent increase in oil prices produced a small increase in the state's output and no net job gain. But a 50 percent increase -- that's another matter.

How it happened

Why are oil prices so high?

Strong demand in countries like China and India has strained global supplies. Political unrest, such as recent violence in Nigeria, ia another factor. Wall Street speculators have also pushed prices higher.

How does this affect gas prices?

Every $10 increase in oil prices eventually adds about 25 cents to a gallon of gas.

Will prices go higher?

The Energy Department that predicts gasoline prices nationwide will peak above $3.40 a gallon this spring, and some analysts say they could go as high as $3.75 a gallon.

With rising oil prices come rising gas prices

$50 | Oct. 1, 2004 | Gallon of gas: $1.818

$60 | June 27, 2005 | Gallon of gas: $2.112

$70 | June 21, 2006 | Gallon of gas: $2.828

$80 | Sept. 12 | Gallon of gas: $2.596

$90 | Oct. 18 | Gallon of gas: $2.638

$100 | Wednesday | Gallon of gas: $2.867

Note: The gas prices are averages for reformulated regular grades in Texas. Source: Energy Information Administration
Read more in the Fort Worth Star Telegram

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