Despite Recent Spike, Gas Prices Are Supposed to Drop Again Soon

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It wasn’t supposed to play out this way. After gas prices plunged in spring, the forecasts called for a continued drop in prices at the pump, with sub-$3 gas around the country likely by Thanksgiving. Thanks mainly to spiking gas prices in the Midwest, however, the national average has risen sharply of late: It was $3.66 per gallon as of Thursday, up from $3.53 the week before, and $3.38 last month. Despite the recent price spike, relief at the pump may still be on the way.

By now, drivers shouldn’t be surprised by anything. In February, we heard that gas prices would easily surpass $4 (or even $5) per gallon by spring. It never happened. While several states crossed the $4 threshold, the national average remained below $4, and springtime and early summer were marked by declining gas prices around the country.

The next round of predictions indicated that $3 gas would become a reality by fall of 2012. Now that too seems very unlikely to happen.

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Prices began rising in mid-July for reasons that are hard for consumers to wrap their minds around—among them, “increasing tensions with Iran, an easing of the crisis in Europe and hopes for more stimulus from central banks,” according to CNN Money. The country’s epic drought, we’ve been told, may also bring about higher prices, as the awful corn harvest will result in more expensive ethanol. Recently, oil pipeline ruptures in the Midwest have caused prices to rise as much as 40¢ in a week.

Earlier this week, a fire erupted at a refinery in northern California, and analysts told the Los Angeles Times the result could be a rapid price hike of around 35¢ per gallon for Golden State motorists. The average gallon of regular, selling for around $3.80 in California last week, was up to $3.92 at last check.

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Despite the price spikes in certain regions and the noticeable increase nationally, analysts tell the Boston Globe that the summer’s price rise is something of a fluke:

“I think it’s an aberration,” said Phil Flynn, an energy analyst at Price Futures Group in Chicago. “If you look at what’s really driving prices, it’s all of these situations that, hopefully, aren’t going to happen every day.”

“Barring more disasters, [gas prices] will come down,” Flynn said. When and how far they’ll come down is anybody’s guess. For that matter, based on how many “expert” gas price predictions this year have turned out to be flat wrong, the idea that gas prices will decrease at all is hardly money in the bank.

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What’s interesting is that, according to AAA’s Fuel Gauge Report, the current national average of $3.66 is nearly identical to the average at this time last year, $3.65. If you just looked at those two data points, you could come to the conclusion that gas prices have remained fairly stable over the past year. In fact, at this point, the only thing that might actually surprise drivers is if gas prices were stable for any substantial length of time.

Brad Tuttle is a reporter at TIME. Find him on Twitter at @bradrtuttle. You can also continue the discussion on TIME’s Facebook page and on Twitter at @TIME.

6 comments
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omckee
omckee

You must and I say this with passion trade-in that truck or SUV because the vehicles that suck the gas out of your wallet all day is not the way to go. We always recommend going with a hybrid or a 4 cylinder vehicle at http://buyherepayherenationwid... or else just suffer as gas approach $5 per gallon.

Tammiendw
Tammiendw

like Tina replied I am in shock that a stay at home mom able to profit $6815 in four weeks on the network. did you look this (Click on menu Home)

Firozali A.Mulla
Firozali A.Mulla

with

Chinese inflation data lifting hopes for fresh easing measures by Beijing, but

gains were limited as weak European data dented recent optimism. Wall

Street and

European traders were unable to provide a strong lead after a three-day rally

on central bank stimulus hopes lost momentum, although the euro managed to eke

out some small gains Thursday. Tokyo was up 0.43 percent by the break, Hong

Kong climbed 0.70 percent, Seoul gained 1.24 percent and Sydney was 0.22

percent higher, but Shanghai eased 0.14 percent. China on Thursday had consumer

price index at 1.8 percent year on year in July, in line with forecasts but

down from 2.2 percent in June and its slowest pace since January 2010. The

figures indicate Beijing -- which has cut interest rates twice this year and

lowered the amount of cash banks must keep in reserve -- has more room to

loosen monetary policy to kick-start the slowing economy. China. No

wonder no one predict the economy these days China’s trade growth has fallen

steadily this year as global demand for its exports cooled and efforts to boost

domestic consumption have failed to gain traction as fast as the government

hoped. The slowdown is politically dangerous for the Communist Party because it

raises the risk of job losses and unrest at a time when the ruling party is

trying to enforce calm ahead of a handover of power this year to younger

leaders. Export industries employ millions of workers and weak sales, coupled

with higher costs, have led to a wave of bankruptcies. In July, its global trade surplus narrowed by 20.3 percent from July

2011 to $25.1 billion but was this year's second biggest after June's $31.7

billion. Exports were $176.9 billion while imports were $151.8 billion. The

trade surplus with the 27-nation European Union, China's biggest trading

partner, narrowed by 37.9 percent to $10.8 billion, reflecting sluggish

European demand due to the continent's debt crisis. The surplus with the United

States narrowed by 4.8 percent to $19.9 billion. Beijing has set a goal of

increasing total trade by 10 percent this year, a target that looks

increasingly hard to meet. Trade grew 9.2 percent for the first half of the

year but the rate fell to 7.1 percent for the first seven months. If the huge economy like

China where the population is also to be taken into account I guess I have no

idea what the domino effect is I could not underline the word HOPES as the

economy is like the shirt we wear change it as soon as the grit shows or just

hide it, turn the collar, save money on the laundry I thank you Firozali A.Mulla

DBA No pun no sarcasm meant Oh boy Coyote and Dragonfly, this should be a

relationship worth talking about :) I spent hours yesterday in the garden

weeding and planting. I must say it is easier planting than weeding. I guess

that is why it is so important to be mindful about what we are thinking as once

the plant or weed is takes root it is much harder to "pull" out. And

boy oh boy those weeds sure take off just as fearful, angry or just plane

worthless thoughts can root and take off....Mindfulness is definitely needed

when coyote and dragonfly are around... How are we tricking our selves? what

illusion needs to be pierced with the light of truth? Enjoy your week with the help; of coyote and dragonfly!

 

 

 

DwDunphy
DwDunphy

 “Barring more disasters, [gas prices] will come down.” However, disasters are the everyday reality we have to work with now. Hottest summer on-record all across the US means eventual ethanol shortages, means the price at the pump must go up. Scarcity affects price. Hurricane season has just been revised upward, more pressure and possible damage to offshore drilling, prices go up. Iran keeps those sabres rattling. Prices go up. You get my point.

We can't rely on the price of gas anymore and, instead, have to look to smarter ways of driving -- mapping and routing like a business would, grouping activities in a way that maximizes efficiency during the time behind the wheel, and paying attention to what the expenditures are. You spend more when you don't have a clear idea of what you're spending on. Joyriding is an oxymoron. 

bellaluna30
bellaluna30

All I know is this:  I was "happy" when gas for my particular reached $401.99999/10th's per gallon.

It's been steadily rising for the last several weeks, and I am NOT amused.