You've probably noticed at the pump: The price of oil is rising again. Experts have ratcheted up their growth projections for the new year, which typically means they expect the price of gas to move higher as well.
"We're expecting strong economic growth, and that's always the No. 1 driver for crude oil," says Brian Hicks, co-manager of U.S. Global Investors Global Resources Fund (PSPFX).
There are a number of factors contributing to Hicks's expectation of higher gas prices. "Despite record levels of investment into crude oil production, we haven't seen a significant increase of non-OPEC crude oil production, so that gives OPEC stronger market share and stronger control of the market, and it implies prices will be going up," Hicks says. On top of that, he says new oil supplies are coming from higher-cost areas like deepwater drilling, which will also push prices higher.
Plus, demand for oil is only rising. This month, the U.S. Department of Energy raised its outlook for global oil consumption to a record-high 88 million barrels a day in 2011. Most of that growing demand is expected to come from the emerging markets countries like China and India. The price of oil will average about $93 a barrel this year, up from December's forecast of $86, according to the Department of Energy. Craig Hodges, co-manager of the Hodges Funds, says oil will fluctuate between $90 and $100 this year. But he believes the real spike will come in 2012.
"It becomes a math equation at some point," he says. "The world can only produce so much oil a day." In 2012, prices are estimated to average about $97, about $2 short of the record high in 2008.
When it comes to investing in oil, investors have a few options, including investing directly in the spot price of oil through exchange-traded funds or in the stocks of oil-related service and drilling companies
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