Where will gas prices go next?


$4 a gallon gas is here. $5 a gallon really isn't out of the question, and might come sooner than you expect. What does stock expert Jim Cramer think? He thinks that with current oil prices at $135 a barrel, that $150 a barrel isn't too far off, and that consumers should be prepared for a rapid run-up at the pumps.

The biggest reason why gas is so expensive? It's not the fault of the oil companies trying to get rich from consumers. It's a simple supply and demand issue. There is no inventory of oil, and every bit that's being pumped is being immediately purchased. More oil is wanted by consumers than is being produced. Like any item that is scarce when compared to the demand by consumers, the price goes up.

Cramer says that once gas reaches $6 to $7 a gallon, that's when we'll see consumers really cut back on their fuel purchases. I agree. Even though $4 and $5 a gallon seems expensive, it's still not a price that will make huge numbers of consumers cut back. Add a couple more bucks a gallon, and now we're at a painful point that will force consumers to change their ways.

Tracy L. Coenen, CPA, MBA, CFE performs fraud examinations and financial investigations for her company Sequence Inc. Forensic Accounting, and is the author of Essentials of Corporate Fraud.