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Oil Prices Retreat After Reaching New Highs

Oil prices have reached a new high of $80.20 a barrel after hitting a record Wednesday of $80.02. VOA's Michael Bowman reports, some analysts think oil prices could soon shoot upward again, reaching prices many would have considered unimaginable just a few years ago.

With America's summer travel months having come to an end, U.S. oil consumption typically drops until the weather turns cold and demand for home heating oil rises. Americans are accustomed to seeing gasoline prices drop in the months of September and October, but that may not happen this year, according to some analysts.

Energy consultant Peter Beutel says, now that the $80 a barrel price ceiling has been breached, prices could continue to climb - or even skyrocket - in the months ahead.

"Now that we have broken the all-time highs, there are a lot of people expecting that we will continue to make new highs on a regular basis, potentially to 90, 100 [dollars a barrel] or even higher than that," Beutel said. "One can make arguments for chart objectives as high as $118 a barrel."

Other analysts say speculative buying is fueling high oil prices. They doubt that global demand for petroleum in coming months will be strong enough to sustain current price levels, much less drive them even higher.

The rise in oil prices has come despite a decision by OPEC to boost oil production by 500,000 barrels a day. But even if the dollar price for a barrel of oil has never been higher, some say the commodity was actually less affordable in 1980, when oil reached $38 a barrel. Adjusted for inflation, $38 then is equivalent to roughly $100 today.

What effect does expensive gasoline have on ordinary Americans? A new study suggests it leads to belt tightening, literally and figuratively. Researchers at Washington University in St. Louis, Missouri say they have found that when gasoline prices go up, obesity rates in the United States go down.

The researchers theorize that higher energy costs lead Americans to drive less and seek out other means of transportation, such as walking to a subway stop or riding a bicycle - activities that burn calories. In addition, higher energy costs leave Americans with less cash to spend at restaurants and at the grocery store. End result? Slimmer wallets and slimmer waistlines.