The Energy Information Administration says that gas prices will peak at $4.15 in mid-August. Honest.
According to Reuters," Last month, the EIA projected gasoline prices would peak in June at $3.73 per gallon of regular grade fuel."
The EIA track record looks soft.
The argument about gas prices has two huge weights, one on each side. They aren’t likely to be in balance. That would be asking too much. Demand is spread across too many nations and industries to make an accurate count. In Asia, India and China are raising fuel prices by doing less underwriting of the cost of gas. In the US, the theory is that the consumer will stop driving and stop flying because it is too expensive. That maybe true, but riding a bike 20 miles in the heat may have little charm.
The other side of the cycle is based on supply, speculation, and the dollar, but not in equal parts. There are almost as may opinions about the extent to which OPEC is driving higher prices as their are experts.
At this point, the tight supply side is winning. That will be the case as long as oil sits above $100. That could be for a long time.
Look for $5 gas by Labor Day.
Douglas A. McIntyre
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