OIl Price racing past USD100 mark

• Oil may breach USD120/barrel by end of week
• Crumbling Eurozone may help to stabilise oil demand
• War in Iran will push oil to new record high

American motorists are now bracing for petrol prices to shoot up to as high as USD4 per gallon, breaking records set in 2008-2009 oil crisis when it peaked at USD 3.95 per gallon when oil was trading at USD125 per barrel.

Brent has been edging past USD115 for a few days while West Texas Intermediate is cooling off a bit as it edges just beyond US100. The gap between Brent and WTI prices are now at record levels indicating a serious concern about supply of Middle Eastern and other sources.

The Strait of Hormuz carries 20 per cent of the world's oil supply and Iran has promised to shut it down should Israel or it's proxies were to wage war on Persian soil.

With tension escalating between Israel and Iran and now apparent political will from the United States, United Kingdom or NATO to cool the situation, it is likely that supply from the Middle East and the rest of the world will be constricted and the US will be forced to extract more from its own fields and reserves.

The steady devaluation of the Euro may help to stabilise prices for a short while as the US dollar holds on to its value but this situation is also untenable as the American public debt continues to  baloon and it is expected to be inflated by a further few trillions if the US military starts moving into Iran.

While factors such as continuing bitter cold weather in Europe will continue to push Brent prices higher, the unusually warm US winter will help keep WTI prices on a more gradual incline, even so commidties outlooks tend to see continuing higher oil prices for the next few weeks.

Meanwhile economists are still grappling with the possible effects of the fast crumbling Eurozone, now that Moody's has downgraded Spain, Italy and Portugal and changed the outlook for the UK and France to negative.

As it stands, with tension in the Middle East remaining constant and the European winter continues to suppress the mercury, we can expect Brent to breach USD120 in about a week's time, if not by the end of this week.

Meanwhile WTI will follow in some of the vacuum of the Brent increase and rise to about USD105-106, maintaining the USD15 premium gap between the two grades of black gold.

If war breaks out between Israel and her proxies and Iran then all bets are off and we can expect oil, gold and silver prices to reach new records by June 2012 and once summer is in full swing we can make better forecast of where oil prices will go.

Although the Government has kept mum on fuel prices, Malaysians should expect some adjustments to be made, especially if oil persists above USD100 for more than one month.

In June 2008 we saw petrol price jump to RM2.70 and this put a lot of extra burden on the already shrinking take home pay that Malaysians have to endure as a result of the global economic uncertainty.

With this in mind, carmakers will do well to begin promoting less sexy fuel economy attributes of their vehicles so that people will get used to the idea by the time Malaysian petrol prices start going up.

The Government will probably do everything they can to keep petrol prices where it is until after the 2013 General Election.

Honda US's Hybrid mileage class action lawsuit deadline today

Via Autoblog

Honda USA is facing a class action lawsuit which will see it dish out millions in compensation to owners who never achieved anywhere near the advertised fuel economy numbers but after paying off legal fees, owners are likely to get USD200 and a coupon against the purchase of their next Honda.

Those who participate in the class action lawsuit cannot go against Honda on their own and a recent victory by California motorist Heather Peters who successfully got the court to award her USD10,000 may caue many to let go of the class action lawsuit and demand compensation from the Japanese carmaker individually.

The deadline to make that decision is today and Honda will then know how many cases they will have to fight individually on this one, it could break the company if thousands of individual cases come up for hearing.

Interestingly Toyota has not been under such fire for fuel economy claims when it comes to the Prius.

We will do some research and tell you guys if the two companies make very different claims for their products and which, if any, is more reasonable and realistic.

Diesel sales booming in the US, Hybrid numbers dip 2%

Yet another proof that in the short to medium term, diesel is the real option for real world motorists who want to continue to enjoy their car while saving money and saving mother earth.

2011 sales in the US bumped 27.4% compared to 2010 and this is an example of how people decide with their wallet the best way to protect the planet.

While 27.4 per cent is a nice fat number, the actual number of diesel passenger cars sold in the United States is very small, that is to say they are less than 10 per cent of total vehicle sales, in fact diesel cars account for about 6% of new car sales in the States.

Month (2011 v. 2010)	Clean Diesel +/-	Hybrids +/-	Overall Market  +/-
Aug. 2011	+20.4%	(-11.8%)	+7.5%
July 2011	+43.7%	(-17.7%)	+0.9%
June 2011	+25.7%	(-41.4%)	+7.1%
May 2011	+33.8%	(-42.1%)	(-3.9%)
April 2011	+42.2%	+4.8%	+17.7%
March 2011	+36.3%	+46.4%	+16.8%
February 2011	+37.5%	+39.0%	+27.2%
January 2011	+59.5%	+12.1%	+17.2%
December 2010	+18.6%	+12.7%	+11.1%
November 2010	+30.0%	+2.7%	+16.9%
October 2010	+44.6%	(-1.6%)	+13.4%
September 2010	+124.1%	+10.7%	+28.4%
August 2010	+52.8%	(-38.3%)	(-21.0%)

VIDEO: Inside Mercedes-Benz Classic Centre USA

These boys don't go to work, they get to enjoy their hobby and get better at what they like to do while people pay them to do it...sweet