No Stopping Oil Prices

Gasoline prices are now above $2 a gallon in many parts of the U.S., which has raised questions about a dampening of consumer spending.

Domestic demand for gasoline will continue to keep prices high through the summer, because refiners who make gasoline from crude can still sell their product for nearly $60 barrel, keeping their profit margins high, said Tom Kloza, chief oil analyst at the Oil Price Information Service in Lakewood, N.J.

"Everyone thinks crude oil is determining the price of gasoline, when in fact it's the high gas prices that are tugging crude oil prices higher," he said.

Chip Hanlon, chief financial officer of Europacific Capital, an international investment firm in Newport Beach, Calif., said global demand would probably keep prices high. As China and India experience high economic growth rates, their energy needs are pressuring the world's oil producers, he said.

"The market reacted to the [Saudi] announcement by looking and saying that it really doesn't change much about global supply and demand," he said. "That points to a long period of time of higher oil prices. If it were a stock, I'd say 'Wow, that stock could go to $50 in a hurry.'"

Recently, OPEC officials and some of its members have said the price spike is not their fault and that there is little they can do about the situation.

Saudi Arabia also indicated it was interested in boosting its future production capacity. The kingdom is now capable of producing about 10.5 million barrels a day and said it could achieve the 12 million-barrel level.

Flynn said that was critical to eventual price stability -- probably around $38 to $42 a barrel, because Saudi Arabia still has the greatest leeway for increasing production.

"OPEC had been very much behind the curve in terms of demand growth from Asia, and now they're trying to play catch-up," he said. "When you get that far behind the curve, it's very difficult to get things back under control in a short time. You're really at the whim of what the news is."