‘Worst may be over’ for high gas prices

By Thomas V. Bona

BusinessRockford.com

Illinois gas prices could stay above $4 into fall 2009, based on the latest national projections by the U.S. Energy Information Administration.

The agency’s monthly forecast, issued Tuesday, projected prices to peak nationally in August at $4.15 a gallon, more than 10 cents higher than today’s prices. Rockford is running 8 cents higher than the national average, and Illinois is running 9 cents more.

Analysts say the peak may be in sight.

“The worst may be over, but on the other hand, it’s probably not going to improve a whole lot,” said David Sykuta, executive director of the Illinois Petroleum Council.

The latest report cites rising global consumption and little room for increased production as the keys in rising oil prices. But the report also showed that global demand for oil isn’t increasing as fast as previously thought, and U.S. demand is dropping faster than expected.

“In my opinion, we’re seeing a very good demand response to higher prices,” said Jim Ritterbusch, president of Ritterbusch & Associates, a Galena-based oil trading advisory firm. “Even my wife is thinking twice before she runs into town for an errand.”

But for real relief, he said, several things need to happen: a sustained strengthening of the dollar, a long-term decrease in global demand, and an increase in oil and alternative-energy production. “The last thing (Saudi Arabia) wants to see is ‘demand destruction’ ... where we start shifting to alternative fuels. They don’t want competition for their product.”

Contact staff writer Thomas V. Bona at 815-987-1343 or tbona@rrstar.com.

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