>> tom: oil prices march toward $100 a barrel in the final week of 2010 trading. but that may not be the only energy price shock. why we could be paying $5 for a gallon of gasoline in the not- too-distant future. you're watching "nightly business report" for tuesday, december 28. this is "nightly business report" with susie gharib and tom hudson. this program is made possible by contributions to your pbs

station from viewers like you. captioning sponsored by wpbt >> tom: good evening everyone. thanks for watching. susie gharib is off tonight. energy prices moved higher as temperatures in most of the country remain low. oil rose 49 cents in new york trading today to settle at $91.49 a barrel. during the trading day, oil hit its highest price since the fall of 2008. in just a moment, we'll hear from former shell oil president john hofmeister on why he thinks gas prices are heading for $5 a gallon. he's not the only one who thinks we'll be paying a lot more for energy soon. erika miller talked with experts who predict higher energy prices in the new year. >> reporter: anthony grisanti has been trading oil at the new york mercantile exchange for more than 20 years, so he is used to unpredictable moves in energy prices.

but even grisanti is baffled by the recent rise in gasoline prices at both the wholesale and retail levels. >> to have gasoline, say $3 at the pump for christmas is unheard of. usually the fourth quarter is the time when there's least demand for gasoline. so, i'm very surprised at that. >> reporter: according to aaa, prices at the pump are now averaging $3.05 a gallon nationwide, a 13% increase in three months. blame rising crude prices, which have traded at two year highs for most of december. morningstar's allen good says the rally is being driven by strong energy demand from asia. >> despite small increases here in the u.s., a lot has been driven by china and emerging markets. so, while we really haven't seen any additional production capacity come online the past two years, we have seen demand recover to levels seen in 2008, when oil prices were about $90 per barrel. >> reporter: the big debate is where energy prices head from here. since september, crude has rallied from the mid-70s to above 91 a barrel. some traders think oil will soon

top $100. >> i think probably about $110 or maybe $115 could be the high. but then you have to take in the factors-- is the economy strong enough to sustain $115 crude oil? and we'll find out when the time comes. i don't think it is at this point. >> reporter: but if the u.s. economy really heats up, some experts think crude could hit a new all-time high. >> if the u.s. gets back on track and returns to economic levels before the recession, and demand of oil follows, we really could be in that tight market where the same conditions that drove oil prices to 150 in 2008- - could exist in 2011. >> reporter: another factor that could help push up gasoline prices is strong demand. motorists bought almost 5% more gas in the week leading up to christmas. but some analysts caution that with prices at more than $3 a gallon, drivers may start to cut back. erika miller, "nightly business report," new york.

>> tom: here are the stories in tonight's n.b.r. newswheel: blue chip stocks edged higher as cold weather in the northeast lifted oil prices and energy shares. the dow gained 20 points, the nasdaq lost four and the s&p 500 rose a point. it was another light volume day of trading, but a bit more than yesterday. just over a half billion shares on the big board. 1.1 billion on the nasdaq. despite reports saying people increased their holiday spending this year, consumers are feeling less confident about the economy. research group the conference board says its consumer confidence index fell to 52.5 from a revised 54.3 in november. a reading of 90 indicates a healthy economy. it's not been reached since the recession began three years ago. still ahead, our "word on the street" is "technology." gregg greenberg from thestreet.com joins us with three tech stocks expected to take off in 2011.

normal is once again in sight at airports along the east coast. thousands of stranded passengers are heading home as airlines dig out from the christmas blizzard. as darren gersh reports, when it comes to airport snow removal, speed and technology are in high demand. >> reporter: when you're standing here looking at this, you understand why airports spend $50 million a year on heavy duty snow removal equipment. or more accurately, snow removal technology. computer programmed machines like these cost up to $800,000 and can clean a two-mile long runway in four minutes. >> airports like to travel down at anywhere from 25 to 45 miles per hour with these vehicles. it's a very efficient way to clean the snow from the runway. >> reporter: if that's true, why did so many people end up sleeping in airports last weekend? it wasn't a lack of snow removal so much as the wind howling for hours at up to 60 miles per

hour-- that made this blizzard so powerful. >> i think the winds really increased the impact that we felt due to the fact that it created a lot of blowing and drifting of snow. >> reporter: in white-out conditions, snow removal crews can't operate. and it isn't enough to clear a runway the way you shovel your walk. planes have to land on bare pavement, and airports carefully measure runway friction. the aviation war with winter is becoming increasingly sophisticated. even something as simple as a plow is now made with more flexible, lighter weight materials. and airports are demanding cheaper, more powerful machines capable of clearing thousands of tons of snow in a matter of hours. >> the development of snow removal equipment in airports over the years is to become more sophisticated, to do the job faster, and with less personnel. >> reporter: with better engineering-- and some luck-- that means you'll spend less time here. and more time here.

darren gersh, "nightly business n. >> tom: like your orange juice cold? really cold? it was too cold this morning for orange crops in florida. for the second time in two weeks, an overnight freeze hit citrus groves, coating fruit with ice. florida's citrus industry is worth $9 billion, squeezing up 75% of the country's orange crop and 40% of the world's orange juice. analysts say it's too early right now to know exactly how much damage was done by mother nature's low temps. the weather is predicted to get warmer in the next few days, but growers say they're worried about future frosts, which could really damage their crops.

>> tom: as erika mentioned, pump prices have jumped more than 10% since labor day. this week an opec oil minister said the world can handle $100- a-barrel oil. and our next guest says get ready for gasoline at $5 a gallon. john hofmeister is a former president of shell oil. he's the founder of citizens for affordable energy. >> he join us us tonight. john, welcome to nightly business report. >> thank you. >> you predict $5 a gallon by 2012. why so high? >> all the conditions which led to $5 gasoline in california in 2008 have returned. except they've returned under a different setted of circumstances. now we have more asian growth

and demand for crude oil than ever in history. our economy is recovering, our demand is back to where it was basically in 2008. combine the asian demand with the fact that in this country we have done nothing. we learned no lessons from the 2008 high price period. in fact, we've gone the opposite direction. we've put a moratorium on drilling. we lifted the moratorium on drilling in the gulf of mexico, but granting no permits. the secretary of the interior has moved the next five year leasing plan to 2017. this administration has basically said we're not going to do oil. it's very difficult to do coal as well. >> tom: john, you talk about supply and demand there. demand from asia especially demand from the united states as the economy heats up. what about the supply issue? america, as you know relys on foreigners to feed our oil appetite. 60% of our oil supply is imported wha. are the policy that is need to be put in

place over the next two years to change this? >> well, the first thing that should be done is learn from history. we use to produce 10 million barrels a day in this country. now we're at 7 and headed to 6. >> tom: is the supply underground to get at? >> absolutely. it's not just the gulf of mexico. it's in north dakota, it's the oil shale in colorado. it's the reserves off the coast of alaska, which has just been taken away from the industry to pursue. it's the east coast. it's the eastern gulf of mexico. there's all kinds of reserves that nobody is allowed to touch. i would say to the president, why don't we go back to where we came from? let's go back to producing 10 million barrels a day. that would at least give us 50% of our domestic supply and by the way create about 3 million jobs if we would go that direction. >> tom: john, you mentioned $6 in california. it wasn't long ago that the national price was $4.

$4 a gallon in 2008. the big price dprop, and slowly getting back up there again. is $5 gasoline enough to w stand the environmental concerns in the drilling areas you talk about? >> that's in the eye of the beholder. we've drilled 58,000 wells in the gulf of mexico and had one bad accident. a very serious accident. i don't think that changing the regulatory regime is going to make that much difference, because it has been a safe process but for the exception. i think the industry uses technology extremely well and is very disciplined. >> tom: john othat point we have to leave it there. time is short and precious. like energy. john hofmeister is with us, the former president of shell oil. >> tom: there's no good news in october's report. that's how economist david blitzer summed up today's s&p case shiller home price index. he should know-- he chairs the group that puts the index together. home prices fell in october,

highlighting a renewed decline in the market. all this week, we're looking at economic forecasts for 2011. experts think that's when an improving economy could spark home buying. but as diane eastabrook reports, foreclosures and rising mortgage rates could still dim a housing recovery. >> so this was an unfinished attic and completely finished out. >> reporter: 25-year-old anthony hyman has been house hunting for a year, poking his head inside closets, and checking out bathrooms. >> very nice. these bathrooms are very spacious. i like that. >> reporter: this four-bedroom, single family home on chicago's south side is a little off the beaten track for hyman, but the price is right: $145,000. >> i would like to have a property that doesn't need that much rehabbing, you know, would be best. but, if it's a good deal and a good buy, then i'm all for it. >> reporter: people like hyman bring hope the deep freeze that has gripped the u.s. housing market for three years may finally be thawing.

and the numbers seem to bolster that. home sales began heading up in late summer, slumped in october, then headed up again last month. lawrence yun, chief economist for the national association of realtors, is optimistic the new year will bring good tidings for the housing market. >> i anticipate that home sales will rise anywhere from 5% to 10% in 2011 and the catalyst for driving home sales higher will be the improving economy and job creation. >> reporter: still some experts aren't uncorking the champagne just yet. while mortgage rates are still near historic lows they have been trending up in recent weeks. russ haraus from appraisal research counselors fears that could spell trouble for sales and home values which have plummeted roughly 20% over the past few years. >> we may see somewhat of a pull back in the spring market if that continues, and so we could see somewhat of a price decline. >> reporter: foreclosures are another problem. while they were down last month as lenders addressed

questionable filing procedures, foreclosures are expected to spike again. and this time they could affect a very different demographic. >> a man built a multi million dollar house-- 20,000 square feet. unfortunately, he had financial problems. he went bankrupt. >> reporter: rick levin auctions foreclosed properties, and lately he's been selling more upscale homes. he worries more foreclosures like these could make less affluent buyers jittery. >> when we see people who we thought had financially arrived or made it now having their own financial problems, it's going to give us all pause before we go out and stick our neck out and buy a step-up home, buy luxury cars, luxury boats. >> reporter: hyman's broker, mabel guzman, believes now is a good time to buy because she thinks home prices are near their bottoms. still, she understands why some clients are waiting. >> they keep hearing the banks saying they're going to release more feclosures. so, they're thinking "if there

are more foreclosures coming, i'm going to be negatively impacted. i'm going to wait." >> reporter: real estate experts think the housing market will begin to stabilize by the end of next year with a recovery gaining traction in 2012. diane eastabrook, "nightly business report," chicago. >> tom: another day of thin trading and small moves for the major stock indices. let's take a look at what was moving in tonight's market focus. while the dow industrials eked out just a 20 point gain, it was enough to take the index to its highest close of 2010. the dow has been climbing since labor day, as you can see, and despite the sell-off last month, it has been slowing adding to its gains this month. again, closed at a new high for the year. energy stocks were strong today, including chevron, the leading dow industrial gainer today. shares were up more than 1%. it's enough to put the stock at

its highest price since the summer of 2008. there was some confusion over a chevron gasoline refinery in california. a state agency said it had been shut down, but a local official said it was still running. while we're talking about gasoline, we have to mention general motors. shares hit the gas over wall street excitement about new cars and trucks coming out. a number of different analysts issued opinions and price targets on g.m., ranging from r.b.c. capital's $42 target to morgan stanley's $50 goal. many of the analysts rate the stock a buy ahead of the 2012 malibu and redesigned pick-up trucks and sport utility vehicles. all the talk got g.m. stock moving higher, up to a new high after its november i.p.o. shares added 2% to close over $35. with the surprise drop in consumer confidence, consumer stocks were the worst performing today, but not sears holdings. it's launching its online movie business. the stock rallied more than 2%,

breaking out of the trading range it has been in for the past three weeks. this close over $70 is its highest since mid-november. it's new movie download service is called alpha-line. it will have movies for download the same day they're released on it is worth looking at the industry leader netflix. shares climbed 2% despite the new competitor. it has backed off the $200 per share it hit late last month-- that was an all-time high. the stock has more than tripled over the past year. finally, the business of rare earth minerals. those are elements used in everything from smart phones to sonar. china is the world's largest producer. its exports will drop 35% in the first half of next year thanks to a new quota put in place. stock prices were volatile among the miners. molycorp fell almost 7%. it is working to open the only u.s. rare earth mine in california. the canadian-based rare element resources jumped 10% and the u.s. shares of china shen zhou mining were up 21%. and that's tonight's "market

focus." >> tom: while it has been a year of double-digit stock returns, the nasdaq has out-performed the dow industrials and the s&p 500, driven by technology stocks. tonight's "word on the street" is "technology." gregg greenberg reports for thestreet.com. he joins us from the nasdaq. >> welcome back, nice to see you again. >> always great to be here. >> tom: how about the tech rally? are the conditions set for the tech rally we've seen to continue into 2011?

>> most say it's going to be like 2010 in 2011. you have m & a, and monoliths like microsoft and hewlett packard, and they want to buy things to keep the growth coming. we learned that from cisco's earnings. and people want to increase productivity and don't want to hire. the way you do that is via technology. and then finally, these companies have fantastic balance sheets. they don't have a lot of debt which is what got the economy in trouble in the first place. and a fourth thing. america is officially a gadget crazy country, and the gadget is not that expensive anymore. that's good for apple and some of the gadget making suppliers. >> tom: one of those you mentioned is cisco, one of the worst dow components this year, but has a huge cash horde. the stock is lower today than a year ago with the november drop, and the outlook disappointment. what do you think will fuel

cisco higher. >> recently you had a positive baron's article, and what you mentioned, they have a lot of cash. 40 billion, and despite the stock down, people have great expectations. they're in the clouds, the virtualization and the hot sectors. sxlt wild card is whether or not local government, municipalitys and national governments are going to order from cisco. that was one of the big problems in the third quarter. we'll see in 2011. most people say cisco is going to have a big year. >> tom: 30 seconds on technologies. stock price up 50% since september alone, gregg. >> it has had a fantastic run, and i think 16 times earnings, they do a lot of things with optics and chips, and people still have big expectations for this company going into the new year even after the tremendous run in 2010.

>> tom: and finally, corning is one to look at. technology for liquid crystal display. the stock is unklaifrjed. what's the catalyst for next year. a lot of people thought corning was dead because people aren't buying the big screen tvs. they have new glass. gorilla glass. it's gadget crazy america, and they need glass for the displays and corning makes that. and it's a cheap stock. sten times earnings. so this is a stock with big expectations. >> tom: looking for growth in technology. how about the disclosure? do you have any ownership? >> i do not own any of these stocks. >> tom: you can read gregg's article at the street.com, and there's a link on our website. that's the word from the street.com. and here's what we're watching for tomorrow. hilary kramer is back as our "street critique" guest. we'll answer your questions. email us at streetcritique@nbr.com. and, from providing food, clothing, and day care,

it's a busy time of year for many non-profit groups. we'll see how some are making do with less government help. allstate is suing countrywide financial, claiming it sold the insurance giant $700 million in mortgage-backed securities that turned toxic. also a target of the suit? countrywide's now-parent, bank of america. allstate claims it thought it was buying highly rated, safe investments. instead, it argues countrywide ignored mortgage underwriting standards, making them highly risky. bank of america had no comment on the lawsuit. >> tom: another financial argument between cable providers and broadcast stations. this time the spat involves time warner cable and sinclair broadcast group. it's over how much money time warner pays to carry sinclair's 33 stations, which cover all the major network affiliations. if the two sides don't agree to a new deal, customers could see the cable channels go dark at

midnight friday. >> tom: the new year brings with it a little more take-home pay for most americans. the new cut in payroll taxes is part of the giant tax package president obama signed this month. tonight's commentator isn't so

taken with a slightly bigger paycheck though. he's allan sloan, senior editor at large at "fortune." >> you have to love the way washington does what it calls "compromise." take the recent tax bill. democrats were saying we needed to let taxes rise to shrink the deficit. republicans were saying we needed to cut spending to shrink the deficit. so what was the compromise? cutting taxes, and raising spending. there were some reasonable things in the bill, such as extending unemployment insurance. but cutting social security taxes for everyone? including people like me, who don't need it? and who are not going to go out and buy stuff with it to stimulate the economy? i'm going to take my $2,136, but i can't imagine why i'm getting it. and now, my favorite part. even though i'll be paying less social security tax, the social security trust fund will get the money i'm not paying. the treasury will give the trust fund the bonds it would have

gotten if i'd paid the $2,136, and social security had lent it to the treasury. people have been screaming at the fed for creating money to buy treasury securities under quantitative easing. but no one seems to care that the treasury is creating securities for the social security taxes i'm not paying. and then creating more securities to borrow the money to make up for the taxes i'm not paying. in washington, perhaps, this is called compromise and common sense. where i come from, we call it nonsense. i'm allan sloan. >> tom: that's "nightly business report" for tuesday, december 28. i'm tom hudson. good night everyone. we hope to see all of you again tomorrow night. "nightly business report" is made possible by:

this program was made possible by contributions to your pbs station from viewers like you. captioning sponsored by wpbt captioned by media access group at wgbh access.wgbh.org >> be more.