Gas To Hit $7 Per Gallon By 2010?

A recent report by CIBC World Markets predicts gas prices will hit $7 a gallon, or a 75% increase, in the U.S. within the next two years, ABC News reports.  Further compounding the fear for price increases were statements by OPEC’s president that a barrel of oil could soon be trading for more than $150 and reports that Libya is weighing cutting its oil production.

Investors also grew wary that the Federal Reserve will not raise interest rates until late this year, leaving little hope that the dollar will strengthen.  Oil is traded in dollars and part of the run-up in oil prices has been attributed to the weak dollar.

The run-up in prices will cause a dramatic change in American driving behavior, the report said.  Jeff Rubin, CIBC chief economist and coauthor Benjamin Tal predicted that by 2012, there would be roughly 10 million fewer cars on U.S. roads than there are today.  Roughly half of those giving up their cars will be low-income Americans,  according to the report.