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Oil Impact as it Continues to Hit Record Highs

As oil hits new record highs for the fifth straight day, these costs trickle down to its distillates such as gasoline and diesel fuels, and to the consumer.

Oil for April delivery hit a new intraday high of $109.72 and a new record close of $108.75, and some analysts are predicting $115 - $120 per barrel costs in anticipation of the summer driving season. Last week oil broke through the inflation adjusted high of $103.76 hit in 1980, when oil traded at $38 per barrel in 1980 dollars.


The cost of one gallon of gas hit a new record high with a national average of $3.2272 a gallon up 27 cents in a month, according to AAA and OPIS (Oil Price Information Service). The previous record of $3.2265 was hit last May at the start of summer driving season.

The Energy Information Administration (EIA) has stated that national average may hit $3.50 per gallon this Spring, and possibly even $4 per gallon. The EIA current weekly average stands at $3.225 per gallon for retail gas, and $3.819 per gallon for diesel as of 3/10/08.

Some energy plays in ETFs that have done well this year:

Pure play oil ETFs are the US Oil Fund and the PowerShares DB Oil Fund are both up over 13% in 2008 and over 71% and 50% respectively over the last 12 months.

The PowerShares DB Energy Fund composed of energy futures contracts including Light Sweet Crude, Heating Oil, Brent Crude, RBOB Gasoline and Natural Gas is up almost 14% in 2008, and over 55% in the last 12 months.

The RJ CRB tracks prices of 19 commodity futures, including oil, gas, natural gas, heating oil, gold, aluminum, nickel, silver, copper, wheat, cotton, soybeans, sugar, frozen orange juice, cocoa, corn, coffee, live cattle and lean hogs is up almost 16% year-to-date.