The anxiety began New Year’s Eve when the ethanol tax break was repealed, causing gas prices to increase nearly 4.5 cents.
Since, the national average has climbed to $3.37 — 10 cents more than what we paid on Dec. 31. However, it’s not the 10-cent increase that causes concern. It’s the thought of gas costing $4 a gallon that creates a shiver.
We’ve already read stories that say gas prices will skyrocket 93 cents by spring or summer, up from our $3.27 average at the end of 2011. That means we’d pay $4.20 a gallon. I knew anxiety had begun when my phone rang with questions from concerned consumers:
“What will I do?
“What am I to do?”
Well, relax, educate and prepare yourself in case prices do surpass $4 a gallon in Atlanta and beyond. At this point, that’s all we can do, short of understand a few things. The oil market is like the loops, spins and drops of the famed Son of Beast roller coaster in Ohio. Its bipolar behavior reacts to even a whisper of concern or optimism.
This year, as many have stated, will be a tumultuous year for gas prices, possibly reflecting higher highs and lower lows than 2011. Let’s go back to 2008. Then, for the first time, the marquee read $4.11 for a gallon of regular gasoline — the highest national average on July 16. We shrieked and we screamed. But we seem to forget that by December the national average dropped to a whopping $1.61. Since 2008, despite predictions of $6 a gallon gas by summer 2011, the national average has not surpassed $4. Last year’s high was $3.98 in May and the year’s low was $3.07. We also should note that when gas prices surpassed $4 in the past, they merely lingered. In 2008, the national average remained above $4 a gallon from June 8 to July 25.
Like that roller coaster, the highs and lows we’ve paid at the pump fling our hearts into our throats then drop it to our stomachs as we plummet head-first into what seems sure doom — at least for our bank accounts.
We also have to understand what we’re projected to pay in the future is just that — a projection. Yes, we must analyze history and current events, but also know the many variables that can throw a monkey wrench into even the most accurate forecast.
Concerns that Iran will block the Strait of Hormuz are front and center, pushing oil prices beyond $100 a barrel. Bear in mind this is a concern. Look back to February 2011, when the concern was that Egypt would block the Suez Canal, causing gas prices to rise. It never happened.
Now consider current bearish factors placing downward pressure on prices: gasoline demand has fallen for the past several months and in the past four weeks reflects a drop of 3.5 percent, the European debt crisis still looms with the potential to stifle global oil demand, the value of the euro remains weak, and gasoline inventories have increased. All have the potential to reduce prices in the coming weeks.
So, will we see gas prices breach $4 a gallon by spring or summer?
The most honest answer is it’s too hard to say with 100 percent confidence at this time. It’s definitely a possibility. Knowledge is power. When the odds are strong, prepare. If it does happen, we won’t be standing at the pump with our mouths open, as if we never saw it coming.
Jessica Brady is a spokeswoman for AAA Auto Club Group.
About the Author
