The Days of $2 Gasoline Coming to an End

January 8, 2010 by 1 Comment

Don’t look now, but after spending the past two months fluctuating between $2.58 and $2.66 per gallon, the price of gasoline is now quickly approaching the psychologically important $3 mark.

According to GasBuddy.com, the average price of a gallon of regular unleaded gasoline has climbed to $2.72. The last time prices were this high was back in October 2008.

Today’s price is roughly 3% higher than a month ago ($2.64) and a staggering 54.5% higher than a year ago ($1.76).

Currently, three states are reporting an average price above $3 per gallon – California ($3.02); Alaska ($3.34); and Hawaii ($3.43) – while three other states are reporting an average price below $2.50 per gallon – Colorado ($2.47); Utah ($2.49); and Wyoming ($2.49).

Much of the recent rise in the price of gasoline can be attributed to the run up in the price of oil, which, in the face of a strengthening dollar, has climbed from roughly $69 per barrel mid-December to today’s price of nearly $83 per barrel.

As I stated in my recent post “3 Reasons Why Gasoline is Going to $5 a Gallon,” I’m fully convinced gasoline prices are going to head much higher in the near future. What are your thoughts? Leave a comment below!

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3 Reasons Gasoline is Going to $5 a Gallon

January 3, 2010 by 16 Comments

One of the benefits of The Great Recession has been a respite from high gas prices.  Unfortunately, I think this break will be over very soon and that record high gasoline prices are just around the corner.

Back in July of 2008, the average price for a gallon of regular unleaded gasoline hit a record high of $4.12 per gallon.  Within six months, the bottom had fallen out of the economy and the average price of gasoline had dropped to $1.60 per gallon.

Gas PricesThanks to drastic coordinated measures by the world’s central banks and governments, a total economic collapse was avoided, an economic rebound started to take hold, and gasoline prices climbed back to the $2.60 range.

While avoiding a total “end of the world as we know it” scenario was certainly something that had to be done, the money printing measures may have set us up to face much higher gasoline prices in the near-term future.

Below are the three main reasons why I believe not only will we break the record high prices set back in July 2008, but we can expect to start paying $5 or more for gasoline.

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Oil Falls Below $70; Gasoline up 60% in 12 Months

December 12, 2009 by 1 Comment

The price of oil has fallen below $70 for the first time since early October, thanks to increased U.S. petroleum reserves as well as a strengthening dollar. Since hitting its 2009 high of $82 per barrel on October 25, the price of oil has fallen nearly 15%.

Despite falling oil prices, the national average price of a gallon of regular unleaded gasoline has remained relatively flat over the past month, falling just two cents from $2.65 to today’s price of $2.63.

While the price of gasoline is still well below the record highs set back in July 2008, it is still up nearly 60% from a year ago when the national average stood at $1.65 per gallon.

Currently only Hawaii ($3.53) and Alaska ($3.22) are reporting a state-wide average gas price above $3 per gallon, while 14 states are reporting an average gas price below $2.50 per gallon. Oklahoma currently has the lowest average price at $2.43 per gallon.

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Worried About $4 Gas in 2009? You’re Not Alone

March 6, 2009 by 1 Comment

The stock market is cratering, home prices show no sign of bottoming and unemployment may very well hit 10% or higher this year.

In the past six months, essentially an entire decade of “created wealth” has been erased.  Surely things can’t get much worse this year, right?

Apparently they can, says a recent poll on Daily Fuel Economy Tip.  According to a survey of nearly 300 people, nearly half expect $4 gasoline to return during 2009.

The poll asked “When do you think gas will return to $4/gallon?”  Here’s how the responses broke out:

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Gas Prices Spike, Sign of Things to Come?

January 8, 2009 by 7 Comments

Over the past five days, the national average price of a gallon of regular unleaded gasoline has climbed more than 11 cents, to just over $1.75 per gallon.  The last time the price of gas was this “expensive” was back on December 3.

Although, compared to last summer, I think most of us are willing to live with this relatively mundane price increase.

Most, if not all of the jump in gas prices can be contributed to the fact that the price of oil had climbed from the low $30s just a few weeks ago, to yesterday’s closing price of just under $50 per barrel.

However, today the price of oil fell over 12% to under $43 per barrel thanks to a government report showed a larger than expected increase in crude inventories.

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What is the Fair Value of Oil?

November 5, 2008 by 7 Comments

For much of the past two years, we (meaning most of the world) have been complaining about high oil prices.  As the price per barrel climbed past once unthinkable milestones – $75, $100, $125 and then nearly $150 – the complaints grew louder and louder.

Now that the price of a barrel of crude oil has fallen in excess of 50% from this summer’s record high (after falling as much as 60% before this week’s slight rebound) many of the world’s oil producers – OPEC in particular – are complaining.

In fact, even after recently announcing a 1.5 million barrel per day production cut, OPEC is rumored to be considering another cut of similar size in order to defend an oil price of between $80 and $100 per barrel.

With all of this being said, I think it begs the following question: what exactly is the fair value of oil?

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Where Will Gas Prices Bottom Out?

November 3, 2008 by 11 Comments

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?

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National Average Gas Price Continues to Fall – Now at $2.40 per Gallon

November 3, 2008 by Leave a Comment

The national average price for a gallon of regular unleaded gasoline now stands at $2.40 per gallon – a price not seen since early March 2007.

Gasoline prices are now down nearly 42% from the record highs set back in mid-July of this year.  Over the past month, the price of gas has fallen by nearly 33%; even over the past week, it’s fallen over nine percent.

In fact, prices have fallen so far, that today’s average price is 13% below what it was exactly one year ago.

There are only two states reporting an average gas price above $3 per gallon: Hawaii at $3.61 and Alaska at $3.32.  Currently, 34 states plus Washington, D.C. are reporting an average price below $2.50 per gallon, with Oklahoma reporting the lowest average price at $2.01 per gallon.

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Gas Prices Lower Than They Were a Year Ago

October 25, 2008 by 23 Comments

For the first time in what feels like forever, the price of gasoline is less expensive than it was exactly a year ago.

While this would usually be reason for joy, it appears that the major factor behind the significant decline in the prices of oil and gasoline is the rapidly deteriorating world economy.

Today’s national average price of gas stands at $2.73 per gallon, which is three cents below where it was exactly 12 months ago.  While $2.73 for a gallon of gas certainly isn’t cheap by any stretch of the imagination, it’s certainly a heck of a lot more affordable than what we dealt with for most of this year.

Since hitting a record high of $4.12 per gallon on July 14, the price of gas has fallen by over 33%.  Over the past month alone the price of gas has fallen nearly 25% – thanks to the credit crisis and fears of a very deep and painful recession.

Currently, there are only five states reporting an average gas price above $3 per gallon, with Alaska having the highest state wide average price at $3.60 per gallon.  Conversely, there are now ten states reporting an average gas price below $2.50 per gallon, with Oklahoma having the lowest state wide average price at $2.27.

In an effort to help stem the tide of falling oil prices – which are down nearly 60% from this summer’s record highs – OPEC has announced that it will cut crude oil production by 1.5 million barrels per day.  However, because this cut was less than the expected 2 million barrel per day cut, the price of oil fell about $3 per barrel after the announcement.

This likely means gas prices will continue to fall in the near term.  While this is good news for anyone with a car – additionally, this will effectively kill inflationary pressures – the trade off is we’re having to deal with the worst economy in decades.

Unfortunately, it looks like things are going to get a lot worse – higher unemployment, further declines in stock and home prices, and sinking corporate profits – before they start to get any better.

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Suck It, OPEC.

October 21, 2008 by 15 Comments

Apparently a lot has happened since my last post.

The stock, credit and housing markets have been in shambles; the price of oil has now fallen over 50% from its record highs set this past July; and the price of gasoline has dropped well below the psychologically important $3 mark.

As of this afternoon, the national average price of a gallon of regular unleaded gasoline stood at $2.88, which is about 30% below this summer’s peak prices.  Over the past month alone, the price of gas has fallen nearly 23%.  Additionally, the price of gasoline is now only 7% higher than what it was at this point last year.

Currently every state is reporting an average price below $4 per gallon, and there are only 13 states with average prices above $3 per gallon.  Hawaii has the highest state-wide average price at $3.77 per gallon, while Oklahoma has the lowest state-wide average price at $2.40 per gallon.

Unfortunately, this record price decline might be nearing an end.  The Organization of Petroleum Exporting Countries (OPEC) will be holding a meeting this coming Friday to discuss massive production cuts in order to protect oil prices.  It is widely speculated that OPEC will announce daily production cuts of between 1.5 million and 2 million barrels.

Given the world’s current economic state, it is very doubtful that this production cut will cause oil prices – and subsequently gasoline prices – to shoot back up towards their record highs.  However, it’s not unreasonable to expect prices to, at the very least, stay at their current levels or rise slightly.

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