Gas Prices Are Guessing Game, As Summer Driving Season Begins

Gas prices continue to defy logic, as the markets for crude oil and retail gasoline are off to an unpredictable start for the 2011 driving season. There’s no doubt that Memorial Day weekend drivers spent more this year than last year—about $23 per visit at the pump according to government estimates. But it could have been worse. Gasoline prices have backed off their peak of $4, down to about $3.80 as a national average.

Yet, Americans returned to work today discovered that oil prices are back up, rising above $103 per barrel on the New York Mercantile Exchange. (That’s well below the annual peak of $114 per barrel in April.)

Car buyers have flocked to smaller cars and more fuel-efficient technology so far this year, as gas prices climbed to high levels not seen since 2008. But it’s unclear if they will return to larger more powerful automobiles as gas prices retreat.

Some analysts explain today’s price jump by pointing to the slipping value of the dollar, related to the Greek debt crisis. Others looked at Sunday’s small leak at a pumping station in Kansas, which caused the temporary closure of the TransCanada Corp. pipeline that transports 591,000 barrels of oil per day. Meanwhile, ongoing tensions in the Middle East continue to create jitters in the market.

The consensus seems to be that oil prices will continue to decline for the next few months, bringing much needed relief to drivers throughout the summer driving season. “It’s unusual to see retail gasoline prices dropping during Memorial Day weekend,” said OPIS energy analyst Tom Kloza. He expects prices to continue to fall over the next week. “Most of the $4 gas is going to disappear.”

False Sense of Hope for Gas Pump Relief

The drop in pump prices are temporary, warns TheStreet.com. The website says that Goldman Sachs and Morgan Stanley, are both projecting the possibility that oil could hit somewhere between $120 and $150 as early as the end of 2011. “Compared to what’s to come in the summers ahead, according to the trading experts, this summer’s gas prices are going to look relatively cheap,” according to TheStreet.com. At those levels, the price at the pumps could reach a dreaded new level of $5 a gallon.

Since nobody has a clear enough crystal ball in the short-term, the best hedge against fluctuating gas prices is buying the most fuel-efficient car that meets your needs. And for the long term, especially projected out for 10 to 15 years, environmentalists and consumer groups are supporting proposals for a 60-mpg standard for cars and light trucks by 2025. Reaching that level will require widespread adoption of hybrid gas-electric vehicles. The Center for American Progress says the average American family would save $513 on summer gas expenditures with that new standard, compared to today’s vehicles.


  • MrEnergyCzar

    I think we need to be thankful that we aren’t paying $8 per gallon…yet…

    MrEnergyCzar

  • Yegor

    MrEnergyCzar,

    I love your avatar image :)

  • Anonymous

    Remember, nearly 50,000 vehicles are sold in China everyday.
    Temporarily there will be some declines in price because of European crisis, US economy and so on, but in the long term, prices will steadily continue to increase.

    Already people have realized this and GM & Ford are pushing well into small cars. Get ready to buy a fuel efficient vehicle or carpool or both.

  • Anonymous

    I think China is estimated to consume, about 9.8 million barrel of oil per day in 2010.

    On the other hand, according to CIA fact book, the USA is est. to consume 18.7 million barrel of oil each day in 2009.

  • James Davis

    There was a drip at the kitchen sink…gas prices went up; a cow died in Kansas…gas prices went up. A child lost its left shoe in China…gas prices went up. Buy a fuel saving car…gas prices will go up. Buy an electric car and say ‘to hell with the gas prices going up’.

  • Billy Pig

    So…Goldman Sachs and Morgan Stanley, who stand to make godzillions if the price goes up…predict in the press that the price will go up? Shocking!

  • Capt. Concernicus

    My favorite is how tracking agencies are always “surprised” by how low or how high oil or gas inventories are on a weekly basis.

  • Anonymous

    Whether the Nissan Leaf is ‘greener’ than Toyota Prius is debatable. If the electricity that recharges the Leaf comes from coal-fired plant, the carbon emission is estimated to equal to a gas powered car of 30 MPG.

    For more, see: Turning Over the New Leaf BY CLARK WILLIAMS-DERRY @ Sightline daily

  • Anonymous

    Nissan Leaf outsold Chevy Volt by a big margin in May-2011. High time for GM to rethink the Volt price. Infact in YTD sales, Leaf is just around 20 lesser than Volt.

    Mr Anonymous – Leaf is Greener than Prius. Only 45% of US Electricity comes from Coal. Renewables are increasing and eating into Coal’s share. Seems in another 4-5 years, Solar may hit a price parity with Coal. So far this year, price of Solar PV has gone down by 21% while the Coal will increase with the increase in the price of Diesel, since its the transport fuel.

  • Anonymous

    The other Anonymous:

    Hi.
    - I am not certain the supply of Nissan Leaf is back to normal in the U.S., yet. Any guess how many of Leaf sold and delivered last month were actually produced AND shipped before Mar 11?

    - “Only 45% of US Electricity comes from Coal.”
    You may also need to consider the marginal increase of electricity output. Solar and wind power, great, on paper. But how widespread is it in your LOCAL grid? Do your state promote them? Is the growth of renewable electricity generation sufficient to meet BOTH the need of future growth in electric vehicles AND our ever increasing appetite? If it is not, then we are just shifting our problem from one carbon emission to another. (Are you one of those who bought a ‘supersize-me’ size plasma or LCD TV to replace the old-fashion CRT TV?l How much electricity will it save or rather, how much additional electricity will it use?)

  • readable books

    it’s really good information. i learned a lot of from this article.
    thanks for sharing

  • tapra1

    The Center for American Progress says the average American family would save $513 on summer gas expenditures with that new standard, compared to today’s vehicles.VPS Hosting Reviews