Crude futures hit record $100 a barrel

January 2, 2008 8:21:07 PM PST
Oil prices hit a record $100 dollars a barrel today. The historic triple-digit gas price raises concerns of an economic ripple effect, starting at the gas pump.

One of the country's leading oil experts says $100 dollars a barrel oil has more psychological impact than real impact.

"It's not a big deal in the market at all. It's not going to change any of the companies' behavior, and it's not going to change the prices we pay anymore than an increase from $98 to $99 dollars. It's a little bit higher oil prices that will give us a little bit more expensive gasoline," says Severin Borenstein, Director of UC Berkeley Energy Institute.

However, it was on drivers' minds as they were pumping gas.

"It's going to have to go up to $7 dollars a gallon for people to say, 'oh, I'm going to walk somewhere today'. I mean, everyone has to have their cars. They have to get somewhere, right?"

Another consumer wants to see oil prices climb even higher.

"We need to pay more for gasoline than we do for Coca-Cola, and therein lies the problem."

Unrest in Nigeria is partly to blame for oil prices to rise. Nigeria has more oil than any other African country.

China has been strengthening its ties to Nigeria so its factories will have a reliable energy supply. However, China is also a major source of goods for the U.S. and as energy costs soar, it will be felt in every corner of the global economy. China subsidizes the cost of energy to stimulate job creation and to keep production costs low.

"Recently, the government has made a decision to reduce taxes on imports and to make sure that energy imports are cheaper and that those price impacts don't feel through in production," says Jean-Marc Blanchard, San Francisco State University, Associate Professor of International Relations.

However, higher gasoline prices could curb American spending and that could hurt the economies of both countries.

In the meantime, don't expect any help from Washington on gas prices. The Bush administration says it will not tap into the country's strategic petroleum reserve.