CNN / Fortune
U.S. oil prices look reassuringly calm till you look below the surface.
At first blush, a replay of the 2008 gas price spike seems far fetched. The biggest driver of U.S. gasoline prices is the cost of crude oil, and near-month oil futures on the New York Mercantile Exchange have sat out the scorching commodities rally. They lately fetched $85, some 40% below the crisis peak.
Food for unsettling thoughts
But that's where the good news ends for motorists -- and for a U.S. economy that is sputtering even with gas at $3.15 a gallon.
Much of the oil being made into gasoline now actually costs $105 a barrel. For this we can blame a few of the usual suspects – try Middle East unrest and strong overseas economic growth – and one new one, a weak link in the U.S. petroleum supply chain.
Those factors make the Nymex price "irrelevant for the price of U.S. gasoline," says Olivier Jacob, who runs the Petromatrix trading advice firm in Zug, Switzerland.
Even the government agrees. Last week it projected a 1-in-3 chance the gas price will break $3.50 this summer and a 1-in-10 chance it will hit $4. And if anything those estimates may understate how fragile the balance is.
"It would not take much" to send gas prices back to $4, says Jacob. Cold weather, Saudi reluctance to increase production and possible refinery outages could all play their part...
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