Gas prices WILL keep going up

We have all seen the rise in gas/diesel prices of late and on a percentage basis it has been significant. We don’t feel as bad about it as our point of reference for pain became last summer’s prices. This is a clip from a news article dated January 9, 2009.

In the midst of a grim economy, lower gas prices have been a small but real comfort.  Just don't expect them to last forever.  "I would bet $5 - and I'm not a gambling man - that in the next two or three years we'll be back where we were in July (when gas prices soared above $4 a gallon)," Ochs said this week. "People should say, ‘I'm getting a temporary and very welcome respite from high prices. But I'm not going to be lulled into thinking I'll see $1.44 a gallon prices for very long.' "
 

Oil and gasoline prices continued a recession-defying march higher Friday, doubling in the past six months largely on optimism of a strengthening economy.  The predictions for just how high oil can reach this year, just like 2008, continue to creep upward just five months removed from crude priced around $32 per barrel.  Benchmark crude for July delivery rose $1.23 to settle at $66.31 a barrel on the New York Mercantile Exchange. The gasoline-pump panic of 2008 has yet to surface, but that's not to say there haven't been some double-takes.

Wholesale gasoline prices, which typically rise during this time of the year, are up a staggering 140 percent since Christmas Eve. Retail gasoline prices have hit a national average of $2.467 a gallon, according to auto club AAA, Wright Express and Oil Price Information Service. Pump prices are up 20 percent just in the past month.  A gallon of gas is still $1.485 below the price a year ago and that, at its heart, is why you are unlikely to see the same price spikes this time around. Crude prices have spiked 30 percent this month.  At this time last year, crude prices were brushing up against $130.  While crude has risen fast through May, we're still around $66.  For gas prices to hit $3, crude would need to go to about $100 a barrel, well above even the highest projections this year of $70 to $75, said Tom Kloza, publisher and chief oil analyst at Oil Price Information service.
Still many analysts, including Kloza, have been surprised by the run-up in gasoline.
 

"It's more hope that fact," Sieminski said. "Investors think the economy has bottomed and possibly recovering and they're moving to assets they think will benefit from the economic recovery and that includes commodities generally and oil specifically."

Gasoline futures have been on a tear as well, even though the government reported again last week that demand for it has fallen.  Retail gasoline prices have followed as refiners, seeing consumers driving billions fewer miles, cut back on production.  In a potentially good sign for consumers, refiners ramped up production last week, according to government reports, even though they are still operating well below normal levels.

Not widely reported is the fact that the storage availability for oil is getting razor thin and if this gets attention, it could cause a steep and dramatic drop in crude prices as well as pump prices. The future of the price we pay is in the hands of the speculators and how they feel about our going back to the well (pun intended) for more of our addiction.  Going out on a limb, I predict that gas prices will hit $2.94/gallon the first week in August. So, if you were thinking of taking a camping trip, the longer you wait, the more it will cost.

 Happy Camping