Much to the surprise of most of the country, the national average price for a gallon of regular unleaded gasoline actually fell four cents over the Memorial Day weekend and now stands at $3.20, which is the lowest prices have been in about a week.
While the price drop was unexpected, it certainly wasn’t unwanted, especially considering it gas prices have been on a steady 40% climb since the end of January. However, despite the fall, the national average gas price is still roughly 8% higher than what it was a month ago and is 13% higher than at the exact same point last year.
So does this weekend’s price drop signal that gas prices have peaked, or was it simply a pause on the way to much higher prices?
Based on historical data, it appears that this four cent drop is merely a slight pause and not a sign of things to come. If you look at what gas prices did the past two summers – i.e. continued to increase through the middle of August before beginning to decrease – it looks as if the recent run up in price still has some legs.
That being said, much of the recent 40% price increase can be attributed to problems at various refineries throughout the United States. If these problems are taken care of – and it appears that many of them have been – I suppose it’s not unrealistic to expect prices to plateau or even fall back to the $3 range. While that’s not much relief, it’s certainly better than nothing!
My inclination is to believe that gas prices will continue to increase throughout the summer and that the national average gas price will top out at about $3.40 per gallon. Of course, this is barring any sort of Katrina-like natural disaster or a showdown between the U.S. and Iran.
If one of those things were to happen, even $4 gas might be considered cheap.
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