Where Will Gas Prices Bottom Out?

Over the past four months, we’ve seen an unprecedented decline in the price of gasoline.  After hitting its record high of $4.12 on July 14, the national average price of gas has fallen over 40%, and now stands at $2.40 per gallon.

The last time gas prices were this low was back in March of 2007 – or roughly 20 months ago!

With these being pretty tough economic times, this recent decline in prices is certainly welcomed by many Americans.  That being said, I think I speak for many of us when I say that I certainly wouldn’t mind gas prices dropping a little bit further.

This of course begs the question, where are gas prices going from here?  Are we going to end up with sub-$2 gas for the first time in four years, or have prices finally bottomed out at the current levels?

According to a recent poll on Daily Fuel Economy Tip, nearly half of Americans believe we’ll end up paying less than $2 for a gallon of gas by the time this “correction” is all said and done.

Here’s how nearly 300 people responded when asked, “How far will the national average gas price fall?”:

  • 48% said prices would end up at or below $2.00 per gallon
  • 29% said prices would end up between $2.01 and $2.25 per gallon
  • 23% said prices would end up between $2.26 and $2.50 per gallon

Obviously, this would have been a silly question to ask even just three months ago, but thanks to the air coming out of the commodity bubble, the largest financial crisis since the Great Depression, and the fact that Americans are finally driving less, gas prices have been in a bit of a free fall.

(Some will also attribute this to manipulation by Big Oil in an attempt to help the Republican Party in this election.  I don’t buy it, but I’ve certainly been wrong before.)

Personally, I don’t believe the national average gas price will drop below the $2 mark.  While I do believe their is still some downside remaining in prices, I don’t think it’s another roughly 15% below today’s current price.  Not to mention the fact that if gas does hit the $2 mark, it will have fallen over 50% from this summer’s record highs.

Don’t get me wrong, I would certainly love for that to happen, but I just don’t see OPEC or Big Oil allowing it to get to that point.

Comments

  1. I guess we may all be surprised what happens, but I think OPEC will struggle to constrain prodcution. They’re too used to high prices – they wont be able to help themselves pumping more oil out to get compensate for price drop.

    My bet is fuel economy saving has now become habitual in the west. alternative investment up fast. demand down. china demand a little overdone – now recessions in US/UK etc. new exploration finds up too and eventually refinery capacity will increase too.

    Markets over react so i see oil price going creeping lower before the next long sustained rally.

    In UK and some of europe pump prices, due to tax, are double the US price. the change in car use has been spectacular.. slower traffic … less traffic and low emissions cars dominating sales.

    anybodies guess but i think we are seeing the start of huge deflation in prices… should just trigger an economic recovery one day. Or am i just bored with the media doom and gloom?

    Lance

  2. They ARE too used to high prices… I think gas prices in my area (CO) will hover around 2.20-2.30 eventually

  3. I think gas should hit $2.00 a gallon or less
    and stay there. but it will proby never hapen
    if it doe’s I will be shoked. Same with diesel
    because that is what I drive. If any body want’s to E-Mail me about my comet fell free.

  4. We’re nearing the bottom now. The stimulus packages and Obama’s first 100 days will give us a free card for a few months. Then, all hell will break loose and prices will inflate.

  5. Gas prices here in west Texas where I am have been below $2 a gallon for 2 weeks or so now which dont get me wrong has been extrememly nice I cant remember the last time it only took 35 bucks to fill up my mini van. But one of my biggest concerns or confusions is that I want to now what is going to be happening in the oil industry I mean this may be selfish of me but my husband works in the oil field hauling the rigs and I have noticed over the last few weeks that they have gradually been slowing down a bit. Which concerns me because we have 5 kids a mortgage etc. And his job slowing means trouble for us. Is this decline in prices etc going to affect his job??

  6. Gas will definitely fall below $1 per gallon within the next couple of months.

  7. Actually, the last time that gas prices was this low was in 1973 — adjusted for inflation.

  8. Interesting comment here regarding Obama stimulus package and what may be a bail out of the US motor manufacturers. This is a waste of money, as I think they should be consigned to history.

    They should make way for new motor companies who will come in and replace GM/Ford. They were so slow to adapt to changing demand for more economic vehicles.

    Despite what I said, the long term trend will be back up for fuel prices and that is why alternative fuels need to quickly become normal. Supporting old style manufacturers is not the answer.

    In ten years we need to get to the stage where buying a petrol car will be considered “alternative”. i’m no green tree hugger. it just makes economic, environmental and political sense. By political I mean for us to be less reliant on energy from the middle east and elsewhere.

  9. 48% said prices would end up at or below $2.00 per gallon. i will probably go with them.

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