Over the last two summers we’ve seen gasoline prices hit skyward of $4.00 per gallon as the driving season picks up over the summer. Seasonal demand causes an increase in demand for gasoline every summer as consumers take vacations and travel more causing a to-be-expected price increase. Some fear that as the economy recovers those prices will skyrocket back-up to the historic highs that we saw last summer, but according to the Houston Chronicle, we can breathe a collective sigh of relief.
Since the Houston Chronicle is in the heart of America’s oil production facilities, they extensively cover where energy trends are heading. They recently interviewed Brian Milne who’s the refined-fuels editor at DTN, a Nebraska based-commodity tracker. Milne estimated that gasoline prices would be sitting at approximately $2.25 in the months of May and June and sit at about $2.35 during July and August.
Milne said that it was possible that gas prices could jump up to as high as $2.50 per gallon during the month of July; however wholesale gasoline prices would have to rise much more sharply than most commodity trackers are estimating based on current economic data.
Gasoline is currently sitting at a national average of $2.05 per gallon nation-wide, more than $1.50 less per gallon than it was sitting at just a year ago. We saw a sharp decline in the price of fuel as demand slowed when the 2008 recession began. Since the recession is an international problem, demand has slowed globally and has caused the wholesale price of a barrel of oil to decline sharply.
Most economists are predicting that the economy will recover during the second part of the year, but it will likely be a relatively slow recovery, meaning that the demand for gasoline will also grow slowly. It would likely grow a lot faster if the recession were not a global problem, however demand for crude oil is slowing globally as nearly every major developed nation is facing some form of economic turmoil.
Over the long term, we can expect gasoline prices to rise as the global availability of oil declines and as third world nations industrialize, but for this summer, we can enjoy some relatively affordable gasoline.