Four reasons gas prices are about to fall fast

Gas prices are set to decline even without a release from the Strategic Petroleum Reserve. Temporary factors that have pushed up gas prices are now ending.

Mark Bugnaski/Kalamazoo Gazette/AP/File
In this August file photo, a man pumps gas into his van at a Speedway station in Kalamazoo, Mich. Last month, hurricane Isaac caused the biggest one-day jump in gasoline prices in 18 months, but several factors are poised to push gas prices back down.

While U.S. gasoline prices have been on the rise for the past two months — and are presently $0.15/gallon higher than they were a year ago — I expect that gasoline prices will start to fall rapidly in the weeks ahead. There are four reasons for this.

  • First is that the spike from Hurricane Isaac will be short-lived as damage to oil and gas infrastructure seems to be limited. Facilities will be back online relatively quickly.
  • Second is that summer driving season is at an end, and demand for gasoline will now decline.
  • Third, the transition to winter gasoline (explained in depth in Refining 101: Winter Gasoline and Why Summer Gasoline Means Higher Prices) begins on September 15th. This will both lower the cost and increase the supplies of gasoline.
  • Finally, the recent run-up in oil prices appears to be already priced into the cost of gasoline.

 
All of these factors point to the strong probability that gasoline prices will fall regardless of any government action between now and the election. Of course there are always factors that could trump these. More hurricanes that keep capacity offline, an outbreak of conflict with Iran, and the terrible accident at Venezuela’s 645,000 barrel-per-day Amuay refining complex are all factors that would work to increase prices. But taking everything into account, the safe bet seems to be that gasoline prices will fall just as they normally do in the fall.

This does not even take into account the likelihood that the Obama Administration will release more oil from the Strategic Petroleum Reserve. This will be the topic of my next column.

RELATED: World's most expensive countries for gasoline

You've read  of  free articles. Subscribe to continue.

Dear Reader,

About a year ago, I happened upon this statement about the Monitor in the Harvard Business Review – under the charming heading of “do things that don’t interest you”:

“Many things that end up” being meaningful, writes social scientist Joseph Grenny, “have come from conference workshops, articles, or online videos that began as a chore and ended with an insight. My work in Kenya, for example, was heavily influenced by a Christian Science Monitor article I had forced myself to read 10 years earlier. Sometimes, we call things ‘boring’ simply because they lie outside the box we are currently in.”

If you were to come up with a punchline to a joke about the Monitor, that would probably be it. We’re seen as being global, fair, insightful, and perhaps a bit too earnest. We’re the bran muffin of journalism.

But you know what? We change lives. And I’m going to argue that we change lives precisely because we force open that too-small box that most human beings think they live in.

The Monitor is a peculiar little publication that’s hard for the world to figure out. We’re run by a church, but we’re not only for church members and we’re not about converting people. We’re known as being fair even as the world becomes as polarized as at any time since the newspaper’s founding in 1908.

We have a mission beyond circulation, we want to bridge divides. We’re about kicking down the door of thought everywhere and saying, “You are bigger and more capable than you realize. And we can prove it.”

If you’re looking for bran muffin journalism, you can subscribe to the Monitor for $15. You’ll get the Monitor Weekly magazine, the Monitor Daily email, and unlimited access to CSMonitor.com.

QR Code to Four reasons gas prices are about to fall fast
Read this article in
https://www.csmonitor.com/Environment/Energy-Voices/2012/0910/Four-reasons-gas-prices-are-about-to-fall-fast
QR Code to Subscription page
Start your subscription today
https://www.csmonitor.com/subscribe