Wavepacket Blog displaying only one specific post |
| 2008 | |
| June | |
| Tue Jun 24 22:04:19 2008 Gas Prices |
|
| >> links >> | |
| Tue Jun 24 22:04:19 2008 Gas Prices They will just get worse... |
|
| In
The Great Stagflation of 2008 I made the amazing prediction that gas prices would reach $4.50 per gallon
"before 2010." Well, I was right! Although I wasn't expecting it to happen
so quickly.
Today, I read a story on Yahoo that claimed we should start seeing lower gasoline prices "someday." In particular, they noted that high prices were causing a drop in demand in the US and China, Saudi Arabia was increasing supply, and Iraq was also beginning to increase supply. Great! But I still don't think we'll see lower gas prices anytime soon. For one thing, it does take a while for supply to come down. I predict US gasoline consumption will drop by around 20% between 2006 levels and 2010. But it will probably take 2 more years, since that's how long it took in the late 70's and early 80's for people to change cars, housing, and habits after the 1970 oil shocks. For another thing, gasoline prices still haven't caught up to oil prices. Crude oil prices have risen from around $11 per barrel in June 1998 to over $130 per barrel in June 2008 (see the historical prices at the US Energy Information Administration). That's a 12x increase in 10 years. Meanwhile, US gasoline prices have jumped from $1.10 per gallon in June 1998 to $4.13 per gallon in June 2008. That's a bad 4x increase, but only 4x. Gas prices haven't caught up to crude oil prices! Partly that is because crude oil is only part of the price of gas. But it is also partly because gasoline retailers aren't passing along the full costs of the gas. Even with the higher prices, many retailers are still selling at a loss! So I think it is reasonable to expect gas prices to rise another 25-30% in 2008. I'll make a new prediction: gas prices will reach $6 per gallon in the US before the end of 2008. And I think we'll never see gas prices below $5 per gallon again. There is a chance I'll be proven wrong in a year or so, as demand comes down temporarily. But once production declines begin, gas prices will really skyrocket. Comments |
Related: economics predictions energy Unrelated: books environment geopolitics lists mathematics science |
| Links: |  |
Blog Directory | Blog Blog | Technorati Profile | Strange Attractor |