It appears to me that this summer we will see the highest gas prices of all time…again. Predicting exact price is always impossible, because of so many variables, but while oil and gas can be quite unpredictable, they also follow very clear seasonal patterns. What that means is that from now until memorial day, expect gas prices to increase….as they always do. What makes this year special is that our starting point is the highest it’s ever been.
The ingredients that will lead us to new records this summer:
-Economy is improving by all metrics, and looks to continue that way. More demand = higher prices.
-Ethanol subsidy is gone, leading a 4.5 cent increase per gallon of gas (should be in effect now)
-We are currently at the highest January prices ever, and…
-Last year had very few events which caused spikes in prices (hurricanes, strikes etc). That means that any spike this year caused by a one-off event will send prices way higher than last year, and even without any spikes, prices should still follow last years trajectory. While last year did see the events in Libya rattle investors, it caused a general rise and not a spike (as would happen if a refinery blew up, or a hurricane hit Texas). As the arab spring is still in effect (see Syria), prices will not drop.