Expect Gas Prices to go Down by the New Year? Don’t Count on it.

Despite the fact gas prices have declined for nearly a month and a half straight – falling from a record high of $4.12 per gallon on July 16, to today’s average price of $3.69 per gallon – according to a recent poll on Daily Fuel Economy Tip, roughly two-thirds of drivers believe we won’t see much more relief by the end of the year, if we see any at all.

The poll very simply asked, “What will the national average gas price be on January 1, 2009?” Here’s how over a hundred readers responded:

  • 66% believe gas prices will be in excess of $3.50
  • 17% believe gas prices will be between $3.26 and $3.50
  • 11% believe gas prices will be less than $3
  • 6% believe gas prices will be between $3.00 and $3.25

To put things in perspective, between 11 and 17 percent of respondents believe we will be paying less for gas on January 1, 2009 than we were on January 1, 2008, when the national average stood at $3.05 per gallon.

Considering the price of gas would have to fall by about 20% from today’s price, it seems pretty hard to believe that we’ll see $3 gas this coming January. Should prices fall to $3, that would mark a nearly 30% drop from July’s record high price.

However, while it’s unlikely we’ll see sub-$3 gas within the next four months, it’s not entirely out of the realm of possibility. In order to stand a good chance of getting to $3 gas, I think the following things would have to occur:

  1. The United States would have to get through this hurricane season without much damage to the Gulf Coast’s oil refineries
  2. Geopolitical tensions – especially with Iran and Russia – would need to ease a bit.
  3. The dollar would have to continue to strengthen
  4. The U.S. economy would have to stay weak
  5. American drivers would have to continue buying more fuel efficient vehicles and driving less

Again, it’s not out of the realm of possibility, however, the chances of all five of these things happening are slim to none.

Comments

  1. Very good article.
    I think for gas prices to sustain the continued dip, everything you indicate in the article must happen AND when the great heavens open up…

  2. Well and how did expected the prices to fall that drastically in the last few days? I am curios about what OPEC´s meeting will effectuate.

  3. we want the gas to keep going down

  4. Deric Cheke says

    Wow, prediction was way off. The average price of gas this January (2009) was $1.82 and he said that it would be a miracle if it was low $3.

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    \r\nTo get gas prices down to a more comfortable $3 per gallon, it would take five factors coming to…

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