Wednesday, April 27, 2011

EIA: Gas Prices Will Peak in June, and Then Fall

According to the EIA (data here), real gas prices will peak in June of this year at $3.90 per gallon, and then start gradually falling, reaching $3.60 per gallon by December of next year.  Of course, a lot could happen over the next year, but the current EIA estimate is that gas prices will peak within a few months and gradually decline over the next 20 months. 

11 Comments:

At 4/28/2011 7:15 AM, Blogger Bernie Ecch said...

If oil prices do decline, it will be against the wishes of the President and Energy Secretary who are on record in wanting gasoline to cost $8 a gallon. It also depends on Bernanke will end his idiotic QE policy of deliberately debasing the currency.

 
At 4/28/2011 7:24 AM, Blogger Brian said...

Should we take the fact that gas prices are already over $4/gallon when evaluating the accuracy of these estimates?

 
At 4/28/2011 7:43 AM, Blogger Mark J. Perry said...

Brian: According to Gas Buddy.com at this link, the current national average is $3.86 per gallon, and gas prices were $3.50 per gallon at the beginning of the month. The EIA data reflect monthly averages on a national basis.

 
At 4/28/2011 9:13 AM, Blogger Ironman said...

In case anyone is wondering why President Obama is suddenly so interested in gas prices, there's a long-running correlation between gas prices and future unemployment (the unemployment rate two years from now). What the EIA's projection suggests is that unemployment will rise above today's level to settle above 9% in 2013, even if gas prices do eventually fall back to $3.60 per gallon.

In the short term, that same correlation suggests the U.S. unemployment rate will bottom in the 8.3-8.6% range this year and next.

[Quick side note on the correlation - you'll notice a pretty big gap between gas prices and the unemployment rate of two years later in the years from 2003 through 2006 - that's the effect of the housing bubble, which more than offset the effect of rising gas prices upon the U.S. employment situation during that period. Without a similar exception, we can expect the correlation between gas prices and unemployment to be stronger today.]

 
At 4/28/2011 9:27 AM, Blogger Brian said...

Yes, I mis-spoke. What I should have said was, "Do they really expect gas prices to top out at $3.90/gallon 3 months from now, when they are currently hovering at $3.886?"

 
At 4/28/2011 10:18 AM, Blogger morganovich said...

i'm not sure i see the relevance of "real" gas prices.

do you get to shop in "real" dollars?

sure, wages may be keeping up, but using a CPI delfator says nothing about that.

it also says nothing about costs relative to savings.

last i checked, bank deposits were yielding just about nothing.

if CPI were up 10% and gas were up 9%, would you really view that as in increase in your "real" gasoline purchasing power?

 
At 4/28/2011 10:32 AM, Blogger niknaknoo said...

Priced in gold gas prices should remain steady.

Priced in dollars, gas prices should keep going up and up and up.

 
At 4/28/2011 5:22 PM, Blogger 1389 said...

The fact that the dollar is going down the tubes is part of the damage that Obozo is doing to us.

Gas prices are higher than they need to be because Obozo is doing everything he can to destroy America's energy industry.

Yes, there IS something we all can do about Obama's fuel price fiasco. It starts with putting the blame exactly where it belongs, on Obama and his administration, and keeping it there.

Gas Pump Activism: Print This Poster!

 
At 4/28/2011 9:11 PM, Blogger VangelV said...

It is possible that the EIA will be right once in a while. But a fall will mean that the economy is contracting and driving demand down because there certainly is no supply side help for consumers.

 
At 5/08/2011 2:27 PM, Blogger Monkeesfan said...

VangelV - not necessarily. Gas price spikes and dips have been pretty common over the years.

 
At 5/08/2011 2:59 PM, Blogger VangelV said...

VangelV - not necessarily. Gas price spikes and dips have been pretty common over the years.

I meant a decline that persisted, not a temporary spike down.

 

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