$4 a gallon for gas is coming

Posted at 12:53 PM on March 10, 2008 by Bob Collins (3 Comments)

Tomorrow should be a big day, according to AAA. With the price of oil hitting another new record today (up another 2%), the record average U.S. gas price should be set on Tuesday.

"I would anticipate we'd hit a new record price tomorrow," said Geoff Sundstrom, AAA fuel price analyst. The current record is $3.227, set when oil was around $65 a barrel, something that now seems like a bargain. In Minnesota, the highest price for gasoline currently is in the Roseau-Warroad area ($3.20)

As the chart below (from minnesotagasprices.com) shows, it's surprising the price of gas isn't higher. The red line is gas, the blue line is the price of a barrel of oil.

The experts are saying $4 a gallon by summer seems like a sure bet. When it crossed $3 a gallon, the same experts figured that would be the point when consumers would change their driving habits. Now, they're saying that, perhaps, the $4 mark will make a difference.

It was less than two weeks ago when President Bush said he hadn't heard anything about $4 a gallon gasoline.

On the Web site Op-Ed News, Patricia Johnson has just posted "The Crude Facts About Crude Oil," which does a nice job explaining how events -- as well as the falling value of the dollar -- have conspired to drive up the cost of oil. She also reminds us that the biggest single supplier of oil to the U.S. is Canada.

But regardless of the reason, the price of gasoline is what it is, and summer looks to be pretty pricey.

So, now the question: Will it change your plans for the summer? Will it change the way you use energy?

Comments (3)

Funny, I just went & generated a similar chart for another discussion. Setting the tool to the max timeframe shows a price/barrel of $22 and $/gal of 1.34 around 6 years ago. For most of the time since then, there is a strong correlation between $/bbl and $/gal. The last few months are an anomaly; the coming rebalancing is likely to sting...

Posted by bsimon | March 10, 2008 1:38 PM

I wonder if those that are able to change their driving habits already have. I traded in a Durango for a Subaru last year when it appeared that $3/gal was the new norm. There's not much more I can change about my actual driving - the job is where the job is.

Don't know what I'm going to do when 100LL gets up around $6, though. Probably end up carrying a cost-sharing passenger a lot more often.

Posted by Daveg | March 11, 2008 8:02 AM

Driving home last night out of St. Paul (eastbound), I noticed at one point just about everyone (except for the wisconsinites in the far left lane) were driving the same speed -- about 55 mph. First time that's happened to me since gas hit $1.85 for the first time.

Posted by Bob Collins | March 11, 2008 8:50 AM

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