Just in time for summer, $3 gas is back; World economy struggles to re-start its engine

June 16, 2009 · Filed Under Fuels, News & Reports

California’s average price for a gallon of regular gasoline topped $3 Monday for the first time since last fall, driven higher by a rally in the market for crude oil. Just one month ago, Californians paid $2.52 per gallon, according to the AAA auto club…

…Some analysts say the price increase won’t go much farther.

Oil, they say, is now overpriced, because the demand for oil and gasoline in the recession-plagued United States remains low. If this spring’s oil rally continues, gas will keep rising. If the oil rally stops, gasoline prices should soon level out.

The federal Energy Information Administration last week predicted that gas prices nationwide would peak in July, averaging $2.70 for a gallon of regular for the month. According to AAA, the national average is already $2.67. The auto club expects the national average to pass $3 in the next few weeks.

Reuters

The U.S. economy will not recover until the end of this year, and even then growth will remain meek and vulnerable to higher interest rates and commodity prices, economist Nouriel Roubini said on Tuesday.

Roubini, who rose to prominence for predicting the global credit crisis, tore down the “green shoots” theory that a rebound is imminent, saying there was a significant risk of a “double-dip” recession where the economy expands slightly only to begin contracting again.

“In addition to green shoots there are also yellow weeds,” he told the Reuters Investment Outlook Summit in New York…

Bloomberg

“You’re starting to see the engines of the economy turn,” Obama said today in an interview with Bloomberg Television at the White House. “It’s going to take a long time — we had a huge de-leveraging that took place.”

…The U.S. economy shrank at a 5.7 percent annual pace in the first quarter, capping its worst six-month performance in five decades and reflecting declines in housing, inventories and business investment…

Times Online

British Airways has asked its 40,000 staff to work without pay for up to a month as the ailing airline seeks to cut costs.

The group, which made a record £401 million loss in 2008 amid surging fuel prices and a collapse in premium-fare passengers, is seeking to reduce costs dramatically and has already offered staff unpaid leave or a reduction in hours.

Willie Walsh, BA’s chief executive, has now gone a step further by asking staff to volunteer for between one and four weeks of unpaid work in what he says is a “fight for survival.”