Oil prices on the world market have risen steadily during the past two months, going above $70 a barrel and causing concern that high energy costs could slow the economic recovery from recession. Slowing production has contributed to the price increase, but weakness in the U.S. dollar mayAt the beginning of this year, energy analysts say consumers in the United States were paying $600 million a day to fuel their vehicles. Today, they are paying around $1 billion a day. be the main cause.That is still better than the $1.5 billion a day they were paying a year ago, when the price of oil was around $147 a barrel, but many people are worried that the price may return to that level in the weeks ahead. Economist and energy analyst Ken Medlock at Rice University's Baker Institute believes that is unlikely. He says prices have been going up in part because market traders are overreacting to any sign of increasing demand.
"The International Energy Agency last week issued a report that projected 2009 demand to be down by 2.47-million barrels a day, rather than 2.56," Medlock said. "The oil market rallied by something on the order of $2 when that news hit the wires." Medlock says much of the price rise has been caused by the U.S. dollar's slide in value. Crude oil prices on the world market are set in dollars. Medlock says the fundamentals in the market do not justify much more of an increase in oil prices.
