There's one bit of good economic news for drivers this summer: Gas prices are expected to be more than a dollar per gallon lower than they were last year.
Entering the peak of the driving season last year, the national average price for a gallon of gas was $3.40, and most energy analysts at the time predicted prices would rise throughout the summer. Oil had reached $120 a barrel April 28, 2008, eventually climbing to a record high of almost $147 per barrel in July 2008, and even the president of the Organization of Petroleum Exporting Countries would not rule out the possibility of oil topping $200 a barrel.
Then the global recession arrived.
Today, according to the AAA Fuel Gauge Report, U.S. gasoline prices are now hovering just above $2.25 a gallon, and the Energy Information Administration, or EIA, projects that the nationwide price of gasoline will average a $2.23 a gallon through the end of September.
"Prices are expected to remain low during the summer driving season because of the global economic slump, which has reduced demand and increased domestic gasoline inventories," says Laurie Falter, an EIA analyst. On a month-to-month comparison, she says, U.S. gas consumption has remained almost 2 percent lower this year than last. Furthermore, some energy analysts are predicting energy prices may remain low for years to come.
So, what does all this mean to you? Is this time of affordable gas the right moment to go out and buy that modern-day muscle car or sport utility vehicle you've always dreamed of? Is this the year to take the family on that road trip across the country? Or is this the perfect time to buy one of the latest-generation, fuel-efficient, "strong" hybrids that American and Japanese car makers are bringing to the automotive market?
Blame the economy"We don't think that the nationwide average price of self-serve regular is going to exceed $2.50 this summer," says Geoff Sundstrom, resident fuel-price analyst and director for public affairs at the AAA. "We are noting with interest the recent run-up in the price of oil and, to a certain extent, the rising price of reformulated gasoline experienced and some areas. However, right now, we're not convinced that current demand can necessarily sustain a $60-per-barrel oil price. In fact, what we're seeing in terms of discretionary driving related to travel is a relatively flat demand situation for gasoline this summer."
One of the untold stories with respect to U.S. gasoline prices, says Sundstrom, is not so much the fact that Americans are not traveling by car the way they used to, but rather that our current gas prices are a reflection of the marked decrease in gasoline demand from commerce.