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The price of a gallon of crude may have dropped by $16 in the past month, but for the most part, gas prices haven't followed suit. In fact, the nationwide average hit $4 per gallon just last week, or $1.10 higher than it was at this time in 2010.

But while relief at the pump feels far from fruition, Reuters reports that the worst may be behind us. Gas prices have dropped to a national average of $3.96, the first decrease in eight weeks. Diesel fuel is cheaper as well, down 4.3 cents to $4.03 per gallon.

Phil Flynn of PFGBest Research in Chicago reportedly told Reuters, "I think we've turned the corner and we should expect to see substantial price drops in the coming weeks." Flynn adds that we should see a national price of $3.50 per gallon at some point in the summer. Guy Caruso of the Center for Strategic and International Studies goes a step further, speculating that we may have already seen the peak gas price for 2011.

It's hard to believe that we're looking forward to $3.50 per gallon gasoline, but even a cut of 50 cents per gallon can be a big relief on the family budget. If, for example, you drive 15,000 miles per year and your vehicle averages 25 miles per gallon in mixed driving, a per-gallon drop of 50 cents could result in another $300 in your pocket at the end of the year.

It's still early, but we're thinking that the downward trend of oil prices means that relief at the pump is relatively close. Of course, we're not likely to pay $2.50 per gallon again anytime soon, but we'll take whatever we can get.

[Source: Reuters]


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  • 23 Comments
      Dave D
      • 3 Months Ago
      Joe has it right. The short and medium term in particular are determined by speculation. If you draw a graph over years or even decades, then the overall trend is dependent on supply/demand, but the movements over months or even a year or two are determined by how the speculators feel. Gas prices in the US increased by nearly 50% in the last 10 months...does ANYONE, even the most nutty of us on here, really think that the supply or demand has changed by 50% in that time frame? Hell no. That is pure speculation.
        Dave R
        • 3 Months Ago
        @Dave D
        Oil supplies are notoriously in-elastic. That is why a small change in world supply or demand can have such a drastic change in prices.
      Ryan
      • 3 Months Ago
      It all depends on how strong the dollar is and if big investment firms need a safe place to put money.
      paulwesterberg
      • 3 Months Ago
      Gas at $3.50 this year? Maybe if the US economy tanks or there is major economic instability globally. Past 2011 peak? Not likely.
        Andrey
        • 3 Months Ago
        @paulwesterberg
        If the prices are based on speculation, then, in theory, the rate of decline of prices should be proportional to the number of people believing that the prices will go down... A widespread rumor of declining prices should be able to lower the prices... (I wish it was that easy) Unfortunately not too many people believe that prices will go down.
          Joeviocoe
          • 3 Months Ago
          @Andrey
          Not really... The current price is based on speculation of future "production"... not future prices. And NOT speculation of the masses. Rather the speculation of traders. A few hundred people at the top... at the very most.
      Allch Chcar
      • 3 Months Ago
      So much for Ethanol competing with high Gasoline prices :/. I know that we're still on Spring blend, E75, in the Corn Belt but I was really hoping the prices wouldn't be as affected by Diesel shooting up like it did.
      goodoldgorr
      • 3 Months Ago
      This is the end result of my past comments. It's only the beginning of the free fuel story. It will end-up with free hydrogen gas at grocery stores put in bi-fuel gasoline-hydrogen cars and trucks and fuelcell cars without pollution. This pollution and price hack was an invention from this website, low quality personnel that tried to get rich. Notice that this website push toward an economic hack and get physically sick by the word hydrogen, this is the work to get rid of this depressing website, an internet pollution. Try the experience like i did, just say you want hydrogen and then observe the heresy these journalists and paid bloggers do. They rally get physically sick by the word hydrogen so write hydrogen and observe what they do, LOL. You kill their jobs as soon as you say hydrogen, LOL. This is not a joke, say hydrogen and get rid of autobloggreen forever and don't go back as almost everybody did except me.
        Spec
        • 3 Months Ago
        @goodoldgorr
        Good old gorr . . . you so crazy.
        Dave D
        • 3 Months Ago
        @goodoldgorr
        gorr....it's good to see you back again. I don't know what they hell you're trying to say half the time, but it is always interesting to try and figure it out :-)
        Marcopolo
        • 3 Months Ago
        @goodoldgorr
        Gorr, you've got to stop stealing DF's medication. just because you rant like Charlie Sheen on a downer, won't entice them to give you a TV show!
        gpmp
        • 3 Months Ago
        @goodoldgorr
        hydrogen
        • 3 Months Ago
        @goodoldgorr
        And just how would you propose to generate hydrogen in a renewable (i.e., sustainable) manner?
        Jim1961
        • 3 Months Ago
        @goodoldgorr
        Hydrogen is a lot like ethanol and natural gas. So many people have said these are greener fuels but when examined closely they are not so green. As far as I'm concerned the final nail in the coffin for hydrogen is very well illustrated here> http://www.physorg.com/news85074285.html
          Marcopolo
          • 3 Months Ago
          @Jim1961
          Yeah, but sadly the Germans, with characteristic destirmination persisted to try to bring the technology to market, long after everyone else abandoned the struggle in favour of EV's.
      Joeviocoe
      • 3 Months Ago
      Umm.... does nobody realize the most likely reason for the dip in prices??? The market is speculative... *NOT a true reflection of actual production/supply costs* Which means that Obama's announcements earlier this week regarding opening up Alaskan and Gulf land for leases for oil exploration and extraction.. has made speculators relax, and become more certain that domestic oil will be more available in the future. Gasoline prices are NOT directly tied into the world's oil supply... rather on the "speculation" of FUTURE supply. And Obama's recent announcement is most likely to be the reason that prices are dropping.
        Ziv
        • 3 Months Ago
        @Joeviocoe
        Joe, you should see a graph showing the price of oil over the past 5 years. They peaked in March 2008 after a steady, slow rise of several years. What happened the day they peaked and began to fall? George Bush signed an executive order allowing slightly more business friendly drilling policies. They dropped for over a year until Obama over-rode the executive order in 2009. Now Obama is undoing some of the damage he did. Are these political actions completely to blame for the fall, rise and, hopefully, fall again? Not entirely but the speculative nature of the industry you cite is part and parcel of what we are working to overcome right now.
        Spec
        • 3 Months Ago
        @Joeviocoe
        Obama's remarks on Alaska & the Gulf contributed but they are just part of an incredibly complex picture that also includes Libya possibly nearing an end-game, Chinese demand slowing to due car restrictions & interest rate hikes, US demand continuing to be weak due to struggling economy, etc.
      • 3 Months Ago
      Short term movements may of course have speculative elements, ie people foresee future shortages or perhaps recession restricting demand, but the fundamentals are not greatly out of line. To forestall revolution which would REALLY reduce production and hike prices Saudi has increased it's budget and maintained things like petrol subsidies, which means that their internal demand is consuming ever more of what they can produce leaving less for export as they are giving it away at home. It is now estimated that even Saudi needs a price of $80/barrel to finance itself. If you add in ever increasing demand from the likes of China, which on it's own is putting 13 million NEW cars on the road, ie not just replacing existing ones, then the underlying situation is that supplies are getting tighter and tighter, with only a truly massive recession likely to put a dent in it. In the past US demand has been a reasonable surrogate for world demand, so that a recession there meant weak oil prices. Well, since the US only accounts for 20 or so of total demand, it does not dominate the market to the same extent, and the percentage is falling. That is why people imagine that speculation is fundamental to present prices, as the old levers to reduce world demand, recession in the US and the West no longer work. For much of the world the recession after 2007 was: 'What recession?' I don't know about short term oil trends, but there simply is not enough cheap oil in the world to cover all the potential demand.
      erhcanadian
      • 3 Months Ago
      What does down will go up again.
      Spec
      • 3 Months Ago
      It may or may not be a peak price for 2011. So what? People own cars for 10+ years . . . even if this is the peak for 2011, the relentless rise in the price of gasoline will continue upward past this peak in 2012 or 2013. So in the long run this doesn't mean much.
        Dave R
        • 3 Months Ago
        @Spec
        You're right - it's too bad the average consumer can't look any further than 1 month out - look at how the rise/fall of gas guzzlers and fuel sippers rise/fall right in line with changes in gas prices...
      Marcopolo
      • 3 Months Ago
      Oil prices are only marginally affected by speculation. It's an odd fact that he market for oil is not really affected by supply, well not since the 1970's, but by capital flights from other less stable commodities. Gold prices are completely speculative, since gold production never exceeds demand. Since oil money underpins most economies, the price of oil reflects the condition of economic activity. The US dollar is down because the US is seen as debt-laden economy sunk in recession, lacking in the sort of spectacular growth of the Asian economies. Commodity traders represent a very wide ranging type of investor. The myth that a handful of 'Speculators' control the oil market 'is just another myth'.
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