Fuel Forecast: Oil Is Up, But Gas Will Ease

By Bill Powell

Will the price of gas ever come down? Crude-oil futures, spurred by worries that Russian oil giant Yukos will turn off the spigot, last week exceeded a record $43 per bbl. That's not a high in real terms--oil reached nearly $80 per bbl. in inflation-adjusted dollars after the 1979 Iranian revolution. But it's enough to cause concern that pump prices, already up 50-c- per gal. this year, won't drop much soon. Consumers should get a small break in the fall, analysts say, when demand will ease as the summer driving season ends. Paul Horsnell, head of energy research at Barclays Capital in London, thinks the average U.S. gas price will settle at around $1.80 per gal. by the end of the year, down from $1.90. That's assuming Yukos keeps pumping oil, no terrorist attacks disrupt Saudi production and an oil workers' strike in Norway is resolved. Until then, cost-conscious drivers can compare prices at sites like gasbuddy.com--or think about breaking out the bike. --By Bill Powell. With reporting by Barbara Kiviat

With reporting by Barbara Kiviat