Filed under: International markets, Forecasts, Bad news, Products and services, Consumer experience, China, Russia, Middle East, Economic data, Commodities, Recession
Gasoline prices have continued their charge up to $4 a gallon this day, rising to a new record high of $3.418 after jumping 1.9 cents last night.
Gas prices have been rising sharply over the past few months in reaction to record high oil prices and a weak dollar, and some analysts are already predicting that we will be seeing $4 a gallon before it is all stated and done. Diesel prices also rose to a new high, hitting $4.146 per gallon.
As we noted in earlier discussions, gas prices are only expected to move higher in the next few months as more drivers hit the road for their summer vacations. The heavy demand summer driving months always apply upward pressure to prices, and despite the current high prices, summer demand will definitely push prices even higher.
Right now we’ve several factors working against us. The first, is the upcoming heavy demand summer months as we have already discussed. In global news, we hear that Russia is producing less oil this year, the first time in a decade that this has been the case. China is also in the news this week, announcing that diesel oil imports last month jumped 49%. Iran has spooked some investors with tough speak about wiping Israel off the map if provoked.
Back at home, we continually hear about the falling dollar. As the dollar has been in a literal free fall, all commodities have been moving higher. Consequently, oil is rising, and pushing gasoline higher. If you’re hoping that the dollar is going to rebound soon, don’t bet the farm on that assumption. Analysts are predicting that America is going to be cutting its interest rates at least one, possibly even two more times this year. As you know, lower rates lead to a weak dollar. This will lead to higher oil, and yes… higher gasoline.
With oil analysts predicting that oil is going to be headed up towards $125 this summer, it is definitely feasible that the national average of gasoline will indeed hit $4 this summer. Depending on where you live, $4 gas might already be a reality. California readers know what I am talking about.
Will the current high prices lead to less demand this summer? That’s the question that everyone is asking themselves, and something that we will definitely be hearing more about in the months to come.
For those of you out there that don’t want to cut back on your daily routine, but are looking for ways to reduce your driving costs, one of the best things you can do, is just simply drive slower. It is estimated every additional 10 mph you drive over 60 mph is equivalent to adding 54 cents per gallon to your bill. So perhaps the ideal thing we have the ability to do is just slow down a bit, and take our time. It could put a lot more money back into your pocket!
How about your driving habits? Have you been reducing your daily routine to help fight the current gasoline prices, or going on business as usual and just accepting the current prices? What driving tips would you have for our fellow readers to help keep driving costs down to a minimum?
Michael Fowlkes has worked as a stock trader for seven years and spent the last four years working as an analyst for the online investment advisory service Investor’s Observer.
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