Don’t Be Surprised If US Gas Prices Go as Low as $2.88 a Gallon, Only To Set New Record Next Summer
Submitted by EnergyTechStocks.com
Have U.S. gasoline prices peaked for 2008? Maybe. Will they go even higher next year? Almost definitely.
Every year since 2003, over a period lasting about two to three months, gas prices in the U.S. have fallen anywhere from about 10% to 30% from their summertime highs, as demand slackened with the changing of the season, and as refiners sold off their inventories of summer-blended gasoline and switched over to butane, a less expensive blending agent used during winter months. In 2007 prices started down in mid-July, while in 2006 it was around Aug. 1, and in 2005 around Sept. 1.
So America is right on schedule for a seasonal decline that could see motorists paying somewhere between about $2.88 and $3.70 per gallon this fall or winter, only to have pump prices set new records next spring or summer, just as they have every year since 2003.
It’s called seasonality, and while many on Wall Street apparently unfamiliar with oil’s ebbs and flows seem desperate to declare an end to the oil crisis in hope of lifting the stock market, there’s just no reason to believe pump prices will stay down. Yes, Americans have cut back on their driving. But Chinese car sales are way up, the Washington Post having just reported that, “Car ownership in China is exploding, and it’s not only cars but also sport-utility vehicles, pickup trucks and other gas-guzzling rides.” At the same time, gasoline consumption is climbing in oil-producing countries that subsidize gas prices. Meanwhile, a number of the world’s biggest oil producers - particularly Mexico, Russia, Norway and Venezuela - are experiencing serious production problems that likely will be even worse next year.
Even the head of a major oil company, BP (British Petroleum), thinks that despite the recent fall in the price of oil, there is “an increasing likelihood that oil and gas prices will be stronger for longer.” Britain’s Telegraph newspaper this week also quoted BP chief executive Tony Hayward as warning that the era of cheap oil appears to be ending “faster than any of us expected.”
Then, too, there is the “Dean of Oil Analysts” Charles Maxwell’s forecast that, thanks to the currently-depressed economy and a drawdown of oil inventories, U.S. gas prices won’t really explode for another few years. Maxwell’s forecast: oil shortages start in 2010 and U.S. gas prices hit $12 to $15 a gallon a few years after that. (For more see “Dean” of Energy Analysts Charles Maxwell’s Disturbing Visions of an Oil-Scarce Future)
The International Energy Agency appears to be falling in line with Maxwell, having just forecast that non-OPEC oil production could peak within two years. Maxwell’s forecast is further supported by CIBC chief economist Jeff Rubin, who this week forecast that OPEC oil exports have probably peaked due to OPEC countries’ own rapidly rising oil consumption.
There is some good news. It had been feared that, because of rapidly rising oil demand from China, seasonal price declines might have become a thing of the past. At least for another year, it looks like seasonality will give Americans some temporary relief at the pump.
