2008 outlook: Spending

(NEW YORK) Money Magazine -- Although the cost of a barrel of crude jumped more than 40 percent this year to over $90 in October, the spike was driven more by jitters about unrest in the Middle East and forecasts of strong demand than by a drop in supply.

As a result, most oil watchers expect the price of crude to recede from its recent level of about $93 a barrel to an average of about $80 in 2008.

Make money in 2008:
The entire outlook

• The economy

• Housing

• Investing

• Credit and savings

• Your job

• Spending

That's still up noticeably from a year ago, though, so when you combine next year's higher price with a colder weather forecast, you can expect to pay at least 10% more to heat your home this winter than in 2007 - and possibly a lot more.

Meanwhile, analysts forecast that you'll also face slightly higher prices at the pump - about $2.83 a gallon on average in 2008 (and $3.05 in the peak summer driving season) vs. $2.75 this year. Still, that's an improvement from the $3.15 a gallon you were shelling out in May, when prices topped out.

In addition, you'll find that the weak dollar has made everything from Italian leather handbags to a ski vacation in the Canadian Rockies more expensive.

But for travelers, there are still many places in the world where the dollar goes a long way. Among them: Latin America, Eastern Europe and many parts of Asia.

There's also good news if you're a gadget junkie, as competition among manufacturers leads to sharply lower prices on all sorts of consumer electronics, from flat-screen televisions to laptop computers and digital cameras.

The wild card: A crisis in the Middle East - for instance, a major confrontation with Iran - could cause a serious disruption in the supply of oil. So could a natural disaster that shuts down refineries as hurricanes did two years ago.

If that happens, crude prices could zoom past $90 again and stay there, eventually pushing gas prices well over $3 a gallon.