Gas prices in the last week have leveled off at a national average of $3.92 per gallon and now a key benchmark has fallen to a two-month low, a growing sign that the global economic downturn is about to send gas prices falling at the pump.
If that benchmark truly does show a soon to be declining cost at the pump analysts who predicted $5 per gallon prices wouldn’t only be wrong, they won’t even see gas hit last year’s high of $3.99 per gallon and certainly not the all-time high of $4.11 which was set in 2008.
In some of the United States’ most pricey gas markets, namely Chicago and Los Angeles, prices have fallen an average of 20 cents per gallon.
According to a Gasbuddy.com analyst:
“By the behavior of the market, things are just running out of steam,” and “Barring any major event—refinery problems, Iran—I think prices have peaked.”
Gas prices typically don’t peak until Memorial Day however analysts are now predicting that we could see a national average of $3.70 by early May.
Another industry tracker tells USA Today:
“Even if demand were to surge, we have flush supplies, a lot of refining capacity, and repeated assurances that Saudi Arabia would step in and hike production if there are problems with Iran.”
In the meantime traders are being awfully optimistic that trade relations between the United States and Iran will soon ease, allowing for more production from the region and thus sending the cost per barrel spiraling downward.
When all is said and done it looks like investors lack of confidence in the oil futures market may be the biggest precursor for lower prices, after all its not consumer demand that sets prices these days but instead of bunch of guys in suits who choose pricing based on whatever will make them the most money.