Skip to comments.Gas Outlook: 'Most Painful Year At Pump Ever'
Posted on 01/14/2012 9:20:38 AM PST by magellan
Gasoline prices could approach $5 a gallon by Memorial Day and stay a record levels for much of the summer, according to a forecast by GasBuddy.com.
Gas prices always spike in the summer, but the 2012 Gasbuddy.com Price Outlook predicts this summer will break records.
"It looks like it might be the most painful year at the pump that we have ever seen," senior analyst Patrick DeHaan said.
By Memorial Day, gasoline in the Chicago area could rise to between $4.60 and $4.95 a gallonmore than a dollar above the current average.
DeHaan says there are several factors that will cause the increase, and one of them is a double-edged sword.
"The economy continues to improve; it continues to push up our demand for crude oil," he said.
Another factor is Irans nuclear weapons ambitions. As the United States imposes sanctions, the country responds with threats to close a key oil transit pathway: The Strait Of Hormuz.
This year will be a hard year for most Americans that are not on the welfare. Welfare people will be spared. Middle Americans will tank.
Try to imagine how much worse it would be if Obama wasn't the fourth best president ever!
And not a SINGLE mention of “BUSH’S FAULT!(tm)”, or “Evil Oil man in the White House!” anywhere in this story.
A GLARING example of how differently these stories are reported differently when a Democrat is in the White House.
I wouldn't be surprised because he has said before that our prices should be as high as Europe. But, I can't see any logic in this reasoning.
The government taxes fuel by the gallon, not a percentage of sale. So the higher the price goes, the less people may use - therefore the government take would go down. How could the Van Jones ideals benefit anyone in this economy?
People with government jobs and benefits will continue to do well. Private sector workers will tank.
“The government taxes fuel by the gallon, not a percentage of sale. So the higher the price goes, the less people may use - therefore the government take would go down.”
Not to worry. The discontinuing of the ethanol tax credit combined with the continuing of the ethanol mandate easily overcomes that problem in 2012.
More ‘RAT pro-choice crap. What’s it going to be? Will you be buying gas, electricity, medicine OR food this payday? Choices! How ‘bout that hope and change?
Of all the crap that Obama has done....it will be gas prices that beat him.;
I will gladly pay $5/gallon for a year if it knocks King Barry off his golden throne.
Drill here. Drill now. This is obscene relying on foreign oil when we have pleanty. Also we have coal (ever hear of coal gassification?) and a lot of natural gas. And there are tar sands up in Canada. America, lets get our head screwed on right.
What an absurd statement.
I had some gas this morning at the pump. Scared the lady filling up her Toyota pretty bad.
Nothing to worry about folks. Obama will make sure the green energy companies keep working on renewable energy which might be available in the year 2050!!!!!
We must stop exporting as it was reported here we are a top exporter of gas and oil. Cannot compute.
The people who want the same or a different president have shown they can manipulate gas prices. Maybe, they are tired of this radical Marxist Muslim sympathizer?
A lot of the power of those who manipulate gas and oil prices could be diminished, if government regulations would stop making it so hard on American oil companies. Prices would fall and there would be little OPEC and other internationals could do about it.
Earlier today I read a rather different take on what’s going to happen to oil in the future and it differs from the post. Below are the last few paragraphs of a rather long piece.
Why Oil Prices Are About to Collapse
In my view, there is little or no chance of military action against Iran, and having been to Iran five times in recent years, and as recently as two months ago, there is much I could write on this subject.
While financial sanctions have been pretty smart, and increasingly effective so far, the medium and long term effect of the proposed EU oil embargo which will in fact affect only a pretty minimal and easily accommodated amount of demand which is evaporating anyway is more apparent than real.
While there would undoubtedly be a short term price rise cheered on by the usual suspects in the medium and long term the embargo will act to reduce oil prices. This is because Iran will necessarily have to sell oil at below market price to China and others, and since the market is over-supplied, particularly in Europe, this will undercut market prices generally.
Mexico has routinely hedged oil production for years, and Qatar who are very shrewd operators began to do the same in November 2011 since they expect the price to fall this year. In the short term the Iran crisis is in my view being hyped for all it is worth to entice yet more unwary speculators into the oil market so that other producers may sell their production forward at high prices while they last before the inevitable and imminent collapse.
If you believe the investment banks who all have oil funds to sell to the credulous Far Eastern demand is holding up, supplies are tight, and stocks are low, so prices are set to rise to maybe $120 or above in 2012, even in the absence of fisticuffs involving Iran.
I take a different view. I see real demand as opposed to financial demand and stock-piling, such as in the copper market declining in 2012 as the financial crisis continues at best, and deepens at worst, particularly in the EU. Stocks are low because bank financing of stock is disappearing as banks retrench, and it makes no sense for traders to hold stocks if forward prices are lower than todays price.
As for supplies, US crude oil production is probably higher, and consumption lower, than widely appreciated. Elsewhere, there is plenty of oil available now that much of the Dark Inventory has been liquidated, and this liquidation was probably why in November 2011 we saw the highest Saudi monthly deliveries in 30 years.
Finally, we see North Sea oil being shipped for the first time since 2008 half way around the world to find Far East buyers. We also see Petroplus, a major independent Swiss refiner, crippled by inflated crude oil prices, and shutting down three refineries because demand for its products has disappeared, and it can no longer finance crude oil purchases now that banks have pulled its credit lines.
In my world, refineries closed due to reduced demand for their products imply a reduction in demand for crude oil: but not, apparently, on the Planet Hype of investment banks with funds to sell.
History does not repeat itself, but it does rhyme, and my forecast is that the crude oil price will fall dramatically during the first half of 2012, possibly as low as $45 to $55 per barrel.
As the price collapses we will see producer nations generally and OPEC in particular once again going into panic mode, and genuinely cutting production. We will also see the next great regulatory scandal where a legion of risk-averse retail investors who have lost most or all of their investment will not be pleased to hear that they were warned on Page 5, paragraph (b); clause (iv) of their customer agreement that markets could go down as well as up.
At this point, I hope and expect that consumer and producer nations might finally get their heads together and agree that whereas the former seeks a stable low price, and the latter a stable high price, they actually have an interest even if intermediaries do not in agreeing a formula for a stable fair price.
We cant solve 21st century problems with 20th century solutions and I shall address the subject of resilient global energy market architecture in my next post.
This is a guest post by Chris Cook, former compliance and market supervision director of the International Petroleum Exchange.
By. Chris Cook
Source: The Oil Drum
New EPA rules this year are going to drive up the price of gas and diesel.
This article does not include that fact, just the high demand for crude.
Agreed. Demand should be measurable. Is it up?
So it's because of the booming economy. I want some of this guy's meds for when reality hurts.
“I will gladly pay $5/gallon for a year if it knocks King Barry off his golden throne.”
I would guess that he would lose about 2% of the votes for every dime gas goes up beyond 4.00/gallon, and he has nothing to spare.
But, in order to compensate for these higher gas prices, the EPA wants to reduce sulfur in gasoline AGAIN.
Obama’s energy plan is working as designed. For hard working middle class families of course. /marxist
I will gladly pay $5/gallon for a year if it knocks King Barry off his golden throne.
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I guess the R ‘plan’ is to pound the fact that gas was around 1.75 when BO took office just before the inauguration.
Bush and Cheney AKA ‘big oil’ were being pummeled for that price.
As to the ‘obscene’ profits the oil companies make, how about the ‘obscene’ percentage the Govt (all) gets on every gallon. It does behoove them to keep the prices high as it means more revenue - for the Government, not necessarily the Oil Companies.
I also seem to remember that during the Carter fiasco that tankers were sitting off shore waiting to be unloaded while us consumers were stuck with odd/even day fillups because of the ‘shortage’.
I certainly hope that's the case. At least SOME of the Republican candidates can be counted on to do that. I know Perry would, Newt certainly would. The others I'm not so sure of.
Or its corrolary: "Low gas prices continue to take their toll on the economy, reducing energy costs for both companies and consumers."
I certainly hope that’s the case.
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Sorry, I dropped a small ‘word’ there - I was trying to be facetious.
It should have read
I guess the R ‘plan’ is to pound the fact that gas was around 1.75 when BO took office-
just before the 2013 inauguration.
Could approach $5?
Non-ethanol gas is already $5.19 here in HNL
Magic Island Petroleum in Honolulu. Notice the date in the lower right corner. Granted, this is marine fuel but it used to be cheaper than on-road fuel because there are no road taxes on it. I don't drive so I haven't been to a gas station for awhile and do not know what the current prices are for on-road fuels.