It’s hard to believe sometimes but I can remember when gas use to be under $2/ gallon. And it wasn’t that long ago. The fist time gas hit two bucks a gallon was in May 2004 (East Coast prices). Up until March of 2005 gas would hover around this mark but this would be the last month you could get gas for less than $2/ gallon. In September of 2005, gas hit $3/ gallon. As of this week the average price of regular ‘ol gas is $3.60/ gallon. Wow.
Well, back then it wasn’t too bad to drive your SUV because it may have only cost you $50 to fill-up for a week. Today it’s nearly double. A year ago oil was trading for around $60/ barrel. Today we broke $122. And according to a Goldman Sachs analyst, oil could be on its way to $150-$200/ gallon. That would put gas at $5 to $6/ gallon.
Some believe that oil supplies are strong right now with one analyst countering the $200 notion by saying oil could easily be at $40 over the next two years because supplies are “comfortable”. Here’s hoping for the latter because there will be many, many people who cannot and will not pay $6/ gallon.
And who’s to say this isn’t possible? Already there is strong demand for oil from countries such as China, India, and Russia. This demand from other countries will continue to support higher prices and will keep global oil demand on the upswing. On the flip side there’s also concerns about falling oil production in Russia and Mexico which are huge players in the oil industry.
So where does this all lead us? I certainly don’t know because I’m not an economist but I do know that $4/ gallon for gas is just on the horizon.
Rick Rouse
Rick@OptionsMentoring.com
