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

  • Share
  • Read Later
Getty Images

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.

(MORE: 10 Things You Should Be Buying Used)

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.

(MORE: Will Millennials Change How Cars Are Bought and Sold?)

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.

(MORE: Last Gasp for the Stick Shift?)

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.