Gasoline prices: Have we reached the top yet, or just a false summit?
The danger of consumer sticker shock faded at the pumps this week as gasoline prices appeared to hit a plateau. But analysts are divided over where they go from here.
It looks as if it’s safe – at least this week – to pull out of the driveway and head to the gas station without worrying that the price at the pumps will be a lot higher than the last time.Skip to next paragraph
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Over the past week, the retail price of gasoline has barely budged.
Yes, it’s still relatively high at $3.92 a gallon, according to AAA’s Daily Fuel Gauge Report. But, after rising all through February and March, the daily increases in gasoline prices have ended – for now.
“The price seems to have plateaued,” says Bob Darbelnet, president and CEO of AAA, the national motorists club. “We think it is pretty close to the peak.”
There could be important consequences for the economy if oil prices were to stay close to their current levels or decline. It could take pressure off businesses faced with daily fuel surcharges. And consumer attitudes could start to improve, which could help the economy.
“Simply put, the price hasn’t reached a point where it is so oppressive it is hitting confidence,” says Joel Naroff of Naroff Economic Advisors in Holland, Pa. “If prices stabilize, people will say, ‘I’ve seen this happen before, prices go up, they go down and I won’t worry about it.’ ”
If prices are indeed getting ready to fall, Mr. Naroff says the effect could also extend to the political arena. “If prices fall 50 cents a gallon, gasoline prices are not a major issue,” he says. “If Romney says he’ll get gasoline down to $2 a gallon, not a lot of people will believe him.”
According to AAA, the three cities with the highest average gasoline prices as of Tuesday are Chicago at $4.57 a gallon, San Francisco at $4.35, and Santa Barbara, Calif., at $4.33. The three lowest are Caspar, Wyo., at $3.41 a gallon, Cheyenne, Wyo., at $3.55, and Pocatello, Idaho at $3.62.
Of course with gasoline prices, the Middle East is the “wild card,” notes Mr. Darbelnet. “If there is a major event like a disruption of supply from the Middle East, the odds are prices will rise.”