Thursday, April 12, 2012

Have Gas Prices Finally Settled ?

Like We Always Tell You, When Prices Rise Due to Factors Not Involving Supply or Demand, The Insanity Eventually Has to Stop...

    Call it Newton's Law of Economics: What goes up must... well, at least it must stop going up at some point.  According to many news outlets and gas survey companies, it appears that the worst is over involving prices at the pump... For now. 

    The reasons for the peak at about $3.70 here in South Carolina and $3.92 nationally are for a couple reasons: the main one being the Iranian government coming back some to the negotiating table, and the lower threat of an Israeli air strike on their nuclear capability - in the immediate future.  It's still high, considering the market forces lack of supporting a price hike: demand for gas and oil in the US is unchanged, and supply is steady, therefore prices should stabilize, and they have... That's why we aren't hitting the $4.50 or $5.00 a gallon that some had predicted.

     It's what we have said all along - non supply/demand forces on gas prices are always temporary.  Iran is a major oil supplier, but their production never stopped during all of this. What happened was the POSSIBLE disruption of supply due to political instability in the area, and that sets off the speculators.  Their job is to foresee events and invest ahead of the curve... Sometimes that's good, and sometimes it sets off premature panic, like in this case.

     So, does this mean we are headed for tumbling gas prices, and maybe a few more bucks in our pockets? We doubt it, at least for a few months... We're just about into Summer driving season, which is traditionally a time when demand goes up (see??), so prices going down is doubtful.  But, barring another political crisis over the Summer, we'd expect prices to tumble back in the Fall...  Fear not my friends - it appears the worst is over.



Anonymous said...

Mikey--gas prices will sputter and backslide some but they will rise again and peak mid to late summer, according to Barron's. They are predicting a nationwide average to come in somewhere in the $4.25-4.50 range. At that price, its a long way to go to $3or less gas. If the national average for gas is over $3.25 in October, Obama and the democrats will be hurting in November...teg

Bobby said...

then we will get a hurricane in the Gulf in the fall that affects one oil rig and it will go to $7. a gallon.