How Much Will I Spend at the Pump in 2010?

Demand for oil will not recover significantly until the world economy improves, so there will not be supply problems that drive up the price of oil in the coming year, says a University of Alabama engineering professor who closely follows the markets.

In July 2008, the price of oil exceeded $130 per barrel, due mainly to speculation. By February 2009, the price had declined to less than $40 per barrel. It has since recovered and is currently in the $75 per barrel range. Today’s price reflects a decline in the value of the dollar.

“The value of the dollar will most likely languish for some time, so even in the face of reduced demand, the price of oil will not decline significantly,” says Dr. Peter Clark, associate professor of chemical engineering at The University of Alabama. “This means that gasoline will remain in the range of $2.25 to $2.75 for the coming year,” Clark predicts.

Natural gas prices are beginning to recover somewhat from the summer low prices, but exploration successes have significantly increased the reserves of natural gas.

“I predict that even if the weather gets much colder in the next few months, there will not be significant price pressure. Heating bills should be lower this year than last,” says Clark.

How will the tensions in the Middle East effect oil prices?

“The war in Iraq is winding down, and production of oil from the region should begin to recover. I believe the increase in military activity in Afghanistan should have little or no effect on the price of oil because Afghanistan is not an oil-producing country,” says Clark. “The problems with Iran could result in some speculation in oil. This could bring about an increase in the price of oil.”