Gas Prices Show Unwillingness to Fall
October 9th, 2007 | by Brian Carr |Time for those “Chicken Little” $4 gas predictions. I know it’s a little bit early this year, but just hear me out.
After a meteoric rise in gasoline prices this past spring sparked fears that we would finally see $4 per gallon gas prices, gas prices peaked in the middle of May at about $3.25 per gallon and have been falling slowly ever since.
While this in and of itself is relatively good news (nobody likes paying over $3 per gallon for gas), there is still plenty of reason to be worried about even higher gas prices going forward.
The two major things that concern me and make me think there is a 100% certainty we will finally hit the $4 barrier in the summer of 2008 are the following:
- Gas prices have been stuck at $2.75 per gallon for the better part of two months now
- This time last year, the average price for a gallon of regular unleaded gasoline was $2.25.
As I previously stated, gas prices hit their peak this past summer back in the middle of May at about $3.25 per gallon. Between the middle of May and the beginning of August, gas prices fell roughly 50 cents, or 15%.
Unfortunately, prices haven’t fallen any further over the past two months. In looking at historical price charts, there usually isn’t much movement in gasoline prices between October and January, and February is usually the month when we start to see prices creep up.
If we head into February with $2.75 gas, watch out!
On top of that, when you compare this past summer to the summer of 2006 you get two vastly different pictures. During the summer of 2006 gas prices didn’t hit their peak of $3.14 until the beginning part of August, and within two months had fallen nearly a dollar to$2.25, or 28%. Comparing this to the data I have listed above, it certainly looks like the price peaks and valleys are getting a lot closer together.
Overall, my concern is that gas prices are falling less and less as we leave the summer months, which in turn will cause the peak summer driving season price run-up to continuously climb higher.
Eventually, this has to lead to $4 gasoline and, unfortunately, I think this is going to happen a lot sooner than what many of us are anticipating.
