The price for a barrel of oil rose briefly above $73 a barrel on Thursday, June 11 - its highest level in eight months. Some analysts say the surging prices suggest the worst of the U.S. recession may be over. But others warn the price hikes could delay the economic recovery, as consumers spend more to pay for gasoline.
Global prices for crude oil rising
World crude oil prices have more than doubled in the last four months - amid growing signs that the U.S. economy is starting to improve.
But higher oil prices mean higher prices at the pump. And for some, that means less money for other things.
"It's kind of shocking to pay $88 for one tank of gas," one motorist said.
Helping to drive gasoline prices is a decline in oil inventories and increasing demand during the summer driving season.
Higher prices could hurt consumer confidence
Energy analyst Edward Morse says the downside is that higher prices could hurt consumer confidence and slow the economic recovery. "In three months we went from $2 to $2.60 per gallon and that is a big deal," he said. "Especially as our unemployment rates are going up."
But some say gasoline prices are a bargain, compared to last year when consumers paid $4 for a gallon of gas (about $1.06 per liter) and crude prices were peaking at $150 a barrel.
"At the end of the day, maybe we get down to $55, $60 a barrel, maybe we go a little bit cheaper but we're going to go look back again two, three, four years from now and $60, $70 crude is cheap," said Mike Theesfeld, a New York oil trader. "It's cheap, cheap, cheap."
The U.S. Energy Department predicts the price of oil will average about $67 a barrel in the second half of 2009. But consumers are likely to pay more to heat their homes and drive their cars before prices start to level off.