$5 gas this year?

[Can o Beans]

So I just made a bet with a NeoCon that gas will reach $5/gal somewhere in the lower 48 states sometime before October 1 of this year. The bet is for one tank of gas.

Am I going to lose?

[SmokingJacket]

1. $4, but not $5 yet.

That's my totally uninformed guess.

[jannyk]

27. We're already way past $4 in the Bay Area $5 a dead cert!

[Truthseeker013]

2. $5 gas this year?

You'll lose. $4.75 *tops*.

[dweller]

4. $4.99.9

and he still loses.

dp

[Systematic Chaos]

3. This hurricane season *might* win your bet...

...but if it's calm like last year you may as well plan on buying that tank of gas. It'll be up there, but no five bucks. Not this year.

[Xenotime]

5. Why isn't congress doing something about this?

What the hell are these people in power for?

[tridim]

6. It'll go as high as the public will allow..

And right now the public is pretty damn pissed off.

I'm guessing it will peak at $4.00, stay there for awhile as the public stews and then creep up to about $4.20 before dropping to $3.50 on election day ("See how cheap gas is now!"). That's the best way for the oil criminals to maximize their profit and pad their golden parachutes.

[Timmy5835]

7. According to the Energy Department

Don't expect $4.00 a gallon this Summer.

[karlrschneider]

8. I wouldn't bet against you.

...

[melm00se]

9. you will

more than likely lose.

as prices increase, use drops, inventories increase and prices stabilize and even drop.

[RaleighNCDUer]

10. Chicken or egg?

We've seen the prices creep up to $3+ for no apparent reason - that should depress demand. But summer is coming up, and we are 1 hurricane or 1 terror attack away from a sudden constriction of availability - at the top of the summer driving season.

I would not bet against it. I fully expect most places to top out at @4.50, but somewhere there will be $5, if one or the other happens.

[melm00se]

14. there is a reason

gasoline inventories are down (about 15% since February) and there has been an increase in demand (up 1% year over year)...the 2 work together drive prices up.

while $3 a gallon is painful (i have switched to my motorcycle at 42 mpg full time) it is still close to what it was (adjusted for inflation) in the early 80s. I believe that prices will have to get into the high $3's to lower $4's before there is a real tangible decrease in demand/usage.

Also don't forget that as gasoline wholesale and retail prices increase, imports also increase as it becomes economically feasible to move more gasoline from one place to another. This has the impact of stabilizing or increasing inventories and thus price.

[RaleighNCDUer]

20. I don't believe your statistics.

Not that you are falsifying them - but that the oil industry is lying to us. There is no tangible reason for inventories to be down - if anything they should be up, since we've stopped diverting oil supplies to the reserve. Last time prices were like this Katrina had severely damaged our import, storage and refining capacity. Where is the equivalent damage to the industry today?

Of course, there is the refining bottleneck, with the oil companies self-limiting their refining capacity (which coincidentally drives up prices, and thus profits), but it is only a bottleneck if there is an increased demand. As for that, where are all the Hummers and F150s and other gas guzzlers of three years ago? I don't see them on the streets. Hybrid sales are way up, gas hog sales and down or flat. Meanwhile, the oil companies continue to make record profits.

This is the Cheney energy plan - this is what the secret meetings were about - this is why Gonzo was put in charge of the DOJ - it's all about how to soak the public and make unimaginable profits with no accountability.

[melm00se]

30. ok, fair enough to challenge my numbers

we'll start here:
Government stats
http://tonto.eia.doe.gov/oog/info/twip/twip.asp
OPEC's comments
http://news.monstersandcritics.com/business/news/article_1304912.php/Oil_rises_on_gasoline_inventory_fears

Yesterday's announcement of a slight uptick in inventories has brought some price easing in the gasoline market.

As to the demand question, I would direct you to:
http://home.businesswire.com/portal/site/google/index.jsp?ndmViewId=news_view&newsId=20070517005102&newsLang=en
which indicates and correlates with the 1% entered above.

I agree that the oil company profits are absolutely staggering from a raw number standpoint ($39 billion, Exxon's profit for last year, is a shitload of money) but is justifiable when you look at the total revenues: $377 billion (which is an even bigger shitload of money).

There have been talks of oil company conspiracies for as long as I can remember, but after numerous investigations, across multiple administrations and Congresses of both major political parties, there has not been a single indictment for pricing malfeasance. In fact, I think that, over time, 1 or more of any of the oil companies would have broken ranks and would have begun to sell oil at a much lower price than the market price if nothing else in a move to change their overall standing/size.

this is a commodity and like all commodities (and different from most "normal" products) the prices rise and fall based upon supply, demand, rumor and fact. That is a fact of life. It applies to lots of things, some visible, some not:
Cocoa
Coffee
Cotton
Finex Euro Index
Ethanol
FCOJ / NFC OJ (yes, that is what you think it is: Frozen Concentrated Orange Juice)
Pulp (as in wood pulp)
Sugar

but all of these materials are sold at auction and are based upon supply, demand, rumor and fact...

I am sure that I am going to get flamed and branded as naive but until there is smoking gun evidence (which at this time there isn't, just conjecture, speculation and paranoia - all based upon a lack of understanding on how this all works economically) I will continue to rely on the "laws" of economics as the driver of these prices.

[piedmont]

18. The news outlets today were saying that consumers have not changed their habits at all...

since the latest big price-jump happened. I think the demand response in this particular market is not so strongly coupled to price as you might think. Part of that is because so many people drive such inefficient gas-guzzlers. It would be easier for them to save gas by switching vehicles than by simply altering driving habits.

[FreeState]

11. I think it will top $5 here in San Diego

It has been $3.45 for a few months now. I haven't seen it below $3 since December (not meaning it hasn't happened but I have not seen it personally). There is a Gas station in Mission valley that already has over $4 a gallon on occasion (The Cheveron on the bottom of Texas street - note to visitors don't buy gas any-wear near central San Diego - its a major rip off.)

[Strelnikov_]

12. Not without a hurricane or further collapse in Nigeria

or Jihadi's hitting a major KSA facility or tensions with Venezuela forcing a cutoff or a major US refinery going offline due to an explosion or . . .


Considering the system is already overstretched, and there is probably a 50/50 chance of something happening to further disrupt supply, looks like even money. Thing is, you lose either way, because if it does go over $5 there will be such a crises he will probably declare force majeure.


http://www.energybulletin.net/29657.html

The government remains optimistic that high prices will dampen demand, attract more gasoline imports, and encourage refiners to increase production. The EIA projects that although gas prices will be over $3 in May; they will drop back into the $2.90s during June and July and possibly increase again in August. The EIA says flat out they do not expect gas prices to get anywhere near $4 so long as there are no significant unplanned refinery outages, losses of crude production, or hurricane damage.


Commentary: Gasoline Picture Looking Grim for Dog Days of Summer
By Matthew R. Simmons

Here is a quick run down on the possible disaster we face this summer as we head into Memorial Day with the lowest beginning-of-driving-season stocks in US history. It would have been convenient had someone found out exactly what Minimum Operating Levels really have become. I suspect we will answer this riddle this summer. Minimum Operating Levels of petroleum inventories are when all cushions have been used up and the system is now starting to rob Peter to pay Paul." At this stage, the risk of shortages starting to crop up is Red Alert. Sadly, the last serious study of where this invisible line of minimum stocks is was a NPC study done in 1988.

The reality of gasoline demand is that it will rise during July and August unless we have some roads blocked off to stem demand. Rising late-summer demand has happened almost every year, even as prices rose from $1/gallon to over $3! To supply this market, several things have to work in unison.

1. Refineries need to crank up to over 16 million b/d instead of current 15 as they struggle to get into compliance from too little maintenance for too long.

2. Imports need to average well over 1 million b/d, and probably need to hit 1.5 million b/d, matching the all-time record set last year.

3. No hurricanes can hit the Gulf producing region.

4. Stock draws are the last plug in the dike.

From the looks of things as we view Memorial Day weekend starting in just over a week, we fail on all four counts. The burning question is how much lower stocks can drop before shortages sweep our fragile gasoline supply system. Historically, it has been critically important that we build up gasoline stocks during the spring shoulder season (April-May) so that they can be liquidated during peak demand to prevent shortages. We seem to have run out the clock to fix the problem this summer.

[Ron Green]

13. It should be $8 by now, allowing for inflation.

Should have been $3 in 1980. Life would be different by now, and better.

We're stalling the inevitable, which gets uglier all the time.

[elocs]

15. I wondered that myself and checked an inflation calculator.

When I started driving in 1970 I was paying 25 cents a gallon for gas. Adjusted for inflation, the calculator shows that would be $1.33 in 2007. I've tried other calculators and get the same result. But look how many years gas stayed near 25 cents a gallon when it should have been going up.

[MazeRat7]

16. yes. -nt

[piedmont]

17. Since last summer I've been thinking it will reach $4 in 2007...

as someone up-thread said, hurricane season could make $5 (or higher) happen.

[Awsi Dooger]

19. Well, I guess I win my bet on another site

Last September a right winger on a football forum bet me that gas would drop to $1.70 or less for a national average this year. I told him he was nuts, that the greedy oil companies would never allow that even if supply/demand somehow made it logical.

Somehow I'm not expecting to be paid.

[ProudDad]

21. It's already well over $4

in San Francisco.

And it's not even "peak driving season"...

On Edit: if you're talking about the peak price somewhere in the country, you'll win this year.

[JANdad]

22. I just love the way some "economists"

On DU try and espouse some long drawn out college level explanation as to why gas prices are so high: "Well given the fact that the fleas on a camels ass on the Arabian Peninsula have crawled up the Amir's ass, thereby forcing his doctor to retch from the stench of extraction, the nurse was forced to with-hold services to the King, thereby placing him in a foul mood and subsequently causing him to smack around the oil field workers and one of them tripped over a 2Xd4 anatomizer and this is what is causing the low supply and high demand....blah, blah blah..."

For you oh so bright intellects, please answer for this "barley graduated high school schlub one little question for me; If demand is low, how is it that I can by as much as I want, when I want wherever I want?

Supply and demand my ass...anyone ever heard of Enron and "Kenny Boy"? Do you really believe that for one frickin minute that the powers that be (*) are not causing this to happen?

Please tell me you are pontificating in the hopes that we mere dumb asses will feel oh so inferior to your intellect...


edit for sp

[Odin2005]

25. That's what I most hate about economists: all models and formulae, no common sense

Many economists still spew BS about people as "rational actors", despite that notion haven been proven wrong almost a century ago by Freud. Much of economics is based on starting assumptions (such as the "rational actor") that are rarely examined, mostly for ideological reasons.

[Maat]

26. My hubby was in the oil and gas industry for 25 years ..

he knows that THEY DECIDE what price it is going to be.

[newyawker99]

29. Hi edwardsguy!!

Welcome to DU!! :toast:

[GoneOffShore]

23. One can only hope that it does.

The sooner Americans start paying a realistic price for gas, the sooner we'll wean ourselves from our addiction.

[ForrestGump]

24. Normal, where I've lived most of my life

Then again, so was socialized medicine and a living wage.

I am not thrilled about the gas price increases -- it affects us all even if we do not drive cars and even if the cars we drive are very fuel-efficient -- but it is true that the US has for a very long time enjoyed some of the cheaper petroleum prices on the planet, and in doing so the proliferation of unnecessary SUVs and the like (by which I mean SUVs bought by people who do not need those kinds of vehicles) has been encouraged. It's sad that the increases are, like the cost of diamonds, essentially contrived as an artificial means by which rich and greedy men can get even more rich (and start wars to further the interests of US national corporate security).

[Can o Beans]

28. Thanks for all your replies.

I probably should think more before shooting my mouth off, eh? But, you all know how it is to discuss anything with a Neo.

PAX, CoB

[Union Label]

31. My partner was watching the tv

And said some place in Monterey, California was at 4.99 as of today. But that being said when we went to drive on 17 mile drive the gas was about 1.50 over what we normally paid.