U.S. Gov't: did we say $3.50 for a gallon of gas by Spring? Our bad, it'll actually be $2.50

Ah. Spring. Astronomically, it ... wait a minute. Spring, EIA forecast ...? I just wrote about this Jan. 9. As you can see here, the EIA predicted $3.50 for a gallon of gas by June, the end of Spring. Are they changing their forecasts already? YES! According to Reuters demand for gas has dropped a lot (2.4 percent last week) and EIA analyst Doug MacIntyre "said he 'certainly' expects that his agency next month will publish lower spring gasoline price forecasts." So it worked? Did higher gas prices actually change behavior, cause demand to go down and the sink the price of gas with it?

Not so fast. Doug says "High gasoline prices by themselves have never altered consumer driving habits. ... Only when combined with some other factor have they fallen. In this case, it's anxiety about a recession." That's not all, either. The price for a barrel of oil is below $90, falling ever since it hit $100 (see video below the fold). Sure, we reported Shell and Exxon made huge profits but BP only made $17.2bn last year. Aren't they the real victims in all of this confusion? (he said sarcastically)

So, what does all this mean? New forecasts, oil below $90, BP's lower profits? I will tell you exactly what it means: The U.S. government is really bad at predicting the future. A possible $1 swing for a forecast, a month after making it, for something just a few months away? Come on, EIA, you can do better than that. What will the price of oil and gas be? I don't know and I don't think anyone knows.

[Source: Reuters, CNN, Telegraph, NewsHour]

The video meant to be presented here is no longer available. Sorry for the inconvenience.

Share This Photo X