Earlier this year, as gas prices hit record highs in the winter and spring for that time of year, experts warned we were headed for all time records this summer. Something strange happened before every motorists recurring nightmare happened: gas prices actually started dropping. In fact, prices have fell over $.50 since they peaked in the spring. Experts have now flipped their projections, and believe prices will continue to tumble through the fall.
What has changed since spring? Economic growth in the US has fallen below what was originally projected. A weaker economy has lowered demand for gas in the US. Economic weakness abroad has lowered demand worldwide. Much of Europe has already entered a recession due to the sovereign debt crisis. China is starting to feel the heat as well, as its economy is slowing tremendously.
Speculation has to take some of the heat as well. In the spring, tensions between Iran and Israel were reaching a fever pitch. Iran has recently returned to the negotiating table over its suspected nuclear weapons program, and tensions have cooled considerably. The threat of war is not gone, but it has eased enough to get the speculators to back off.
Experts now believe gas will drop another $.50 by Christmas. It is important to remember that these are the same experts who said gas would go over $4 and maybe even $5 by the summer. Energy price forecasts are less reliable than weather forecasts. There are so many factors that can affect the price that it is nearly impossible to predict it accurately.
Right now there is a problem brewing in the Gulf of Mexico that could directly impact gas prices. A tropic disturbance has formed near the Yucatan Peninsula, and if it strengthens into a hurricane and hits near oil refineries, prices are likely to go up quickly. War in the Middle East is still a possibility, and a growing one thanks to a deteriorating situation in Syria. Economic recovery is also a possibility. Higher demand leads to higher prices.
The good news is that prices should be fairly low (compared to what they were) for the Fourth of July holiday weekend. That is great news for those wishing to take advantage of one of the biggest beach holidays of the year. There should be a lot of travelers out and about this year, and that is good news for the tourist attractions along the Gulf Coast.