Automotive Journal

With oil over trading over $100 a barrel many analysts are projecting gas prices to soar to record levels this summer with a peak in May or June. The Associated Press reports that predictions range from $3.5 to $4 a gallon for the peak national average gas price. That would be a good 25 to 75 cents above last year's record of $3.227 a gallon.

Many analysts believe gas prices will rise this spring to new records near $3.75 or $4 a gallon. But not everyone agrees. Ritterbusch, for example, thinks the high level of supplies, and an eventual decline in oil prices, will pull pump prices down. He doubts prices will rise as high as $3.75 without a major overseas supply disruption or domestic refinery outage. But Tom Kloza, publisher and chief oil analyst at the Oil Price Information Service in Wall, N.J., argues that while gasoline prices won't rise as much this spring as they have in previous years, they are starting from a much higher level. Indeed, prices at the moment are 83 cents higher than a year ago. That means retail prices could peak between $3.50 and $3.75 a gallon, Kloza said, well above May's record of $3.227 a gallon. The Energy Department's latest forecast calls for gas prices to peak near $3.40 a gallon this spring. Of course, gasoline prices also respond to oil futures. Oil has traded in a band between about $86 and $100 a barrel for months, a trend many analysts expect to continue throughout the year. That will likely keep gas prices oscillating in their own narrow band around $3 a gallon for most of the year.

Any unexpected activity like a bad hurricane season or a disruption in the oil supply would spike gas prices even higher than these already ugly predictions. Posted in Gas Prices Permalink | Recent Headlines | RSS Feeds
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