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Summer Travelers Witness Another Rise in Gas Prices

As crude oil costs climb higher, summer travelers are watching the price of gasoline increase. Analysts examine the factors pushing oil prices up.

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  • JEFFREY BROWN:

    It was just last summer that oil prices reached an all-time high, topping $145 a barrel, and Americans were feeling it at the pump with gas prices above $4 a gallon.

    Soon after, the bottom fell out of the economy and oil prices plunged as well, by more than $100 a barrel. Now, rather suddenly, they're back on the rise, reaching $61 a barrel.

    And so the new question as we head into another summer travel season: What's going on?

    Here with some answers, Amy Jaffe, director of the Baker Institute Energy Forum at Rice University in Houston, and Robert Lieber, professor of government and international affairs at Georgetown University. He follows oil issues and the Mideast and is author of "The Oil Decade."

    Well, Amy Jaffe, does the rise in oil prices mean that traders think the global economy might be on the rebound?

  • AMY JAFFE, Rice University:

    Well, there's definitely some optimism in the trading community, especially about the Chinese stimulus package, which is seen as bringing back up oil demand in China. It might be a little less optimistic about our economy, in the sense that some people are buying oil in a bet against the dollar, feeling that the Fed is going to have too loose a policy and print money.

  • JEFFREY BROWN:

    Well, Robert Lieber, demand for oil is still falling, right?

  • ROBERT LIEBER, Georgetown University:

    Way down.

  • JEFFREY BROWN:

    So prices in theory should be…

  • ROBERT LIEBER:

    Yes, they should. The reason is, there is a cartel, OPEC. OPEC since September has cut production three different times. All together, they've cut oil production by about 4 million barrels a day. If the market mechanism were really operating, if OPEC hadn't gotten those production cuts, oil would be a lot cheaper than it is today.

  • JEFFREY BROWN:

    And they're doing that because they want the price up?

  • ROBERT LIEBER:

    Because a lot of those governments are in trouble because they assumed that prices would stay high, that they were going to collect so- called rents forever. And they find, as in the case of Iran or Nigeria or Venezuela or even the Saudis, that they can do a lot better if oil is at $60-plus a barrel than if it's at $30 or $40. They would prefer $100-plus, but by cutting production they are deliberately keeping prices up.

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