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]
Reader Comments (Page 1 of 2)
rick 8:27AM (2/07/2008)
What's really sad are people who put so much faith in a government beaurocrat that he would actually believe what he forecast. If the government was a great forecaster we wouldn't need futures markets.
What's even sadder is people with a voice(like you) convincing people(like your readers) that the government should actually be able to do what even the smartest guys on Wall Street can't do--which is predict the future!!!!!
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brn 8:29AM (2/07/2008)
"High gasoline prices by themselves have never altered consumer driving habits"
What kind of ridiculous statement is that? The price of gas has altered my driving habits. Maybe I'm the exception that proves the rule. I doubt it.
It's a sad day that we're expected to cheer over $2.50/gal.
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K 9:22AM (2/07/2008)
I really hope gas hits $4.00. I'll be so happy to see those redneck jerk-offs in their trucks and SUVs crying rivers from the pain. I can suck it up. Bring on $5.00 gas. Make it $6.00, see how many people "need" their monsters.
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Yggdrasilly 9:35AM (2/07/2008)
K, does your spite extended to construction contractors, electricians, plumbers, and other blue-collar workers who use their trucks for their livelihoods?
The suburban dude-rancher and make-believe cowboy will suck up $5.00 gas prices as easily as you do: it won't eat into their profit margins because they have well-paid pointless cubicle jobs, just like you do. It's the guy who actually works with his hands who'll feel the most pain.
But what am I saying--of course you didn't think about all this. To you, it's all about punishing those contemptible proles.
It's like you're a Romanoff, only without the class and taste.
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Dad 9:43AM (2/07/2008)
"The U.S. government is really bad at predicting the future."
So is autoblog, so what is the point?
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rgseidl 9:56AM (2/07/2008)
It's an election year, the Bush administration is wishfully thinking that all will get better soon. And by better, it means fuel cheap enough for consumers to start buying gas-guzzling but US-made trucks again.
The real worry is that the subprime mortgage mess isn't over yet and won't be before November. That would put the GOP candidate on the defensive. Ironically, it was probably the combination of Bush's tax cuts and the Fed's ultra-low interest rates that prompted banks to focus on market share rather than actual creditworthiness in the mortgage market in the first place.
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Throwback 10:38AM (2/07/2008)
K, do you know everyone who owns a truck/SUV? You must since you charactarize all truck/SUV owners with such offensive language.
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Lascelles Linton 11:40AM (2/07/2008)
Dad, We never made a prediction on gas prices. I think they should stop. Gas is about $3 now. They predicted 3.50 a month ago and 2.50 today. That's not a prediction. Really, what's the point if it can move by a third? That's probably the maximum and minimum of the possible range gas price can move by June. Over all, I blame the fed and nervous economic messages coming from the Bush administration. They need a confidence building message. Not this.
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Travis Rassat 10:49AM (2/07/2008)
I came in to say what rgseidl said. It's an election year.
While K is a bit harsh, I admit that I would also think that high gas prices would also maybe convince people to think more efficiently, but the problem is that there's an easier alternative - credit cards. Rather than trading in their vehicle for a more efficient one or finding ways to drive less, they'll just keep putting their gas on credit cards and the average American debt level will continue to rise.
As Yggdrasilly suggests, we'll all pay in the end - trucking companies will increase their fuel surcharges to compensate, shipping costs will increase, and those costs will be passed on to us as consumers.
Basically, it all pretty much sucks. But, I don't feel right sitting here bitching about it - we need to start looking for solutions. The key is asking ourselves what we can do about it. Well, my short answer is that I try to bike to work as often as possible (weather and schedule permitting). It's a small thing, but it saves me money (about $3 a day at $3 a gallon), gets me some much needed exercise, lowers demand for fuel, and saves a couple of grams of C02 from being thrown into the air every day. It's not much and not everybody can do it, but it's one thing that I can do. I can't dwell on the fact that there's probably a billion people out there that are more than overcompensating for me, but I'll do what I can do!
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Whopper 11:12AM (2/07/2008)
Hey K, I own a pickup and have driven them for fifteen years. Very useful in my line of work. Why don't you come out here and "work" for a living. Them that can, do; them that can't sit back and criticize. A little bit of HONEST work might do you some good, you pompus A$$.
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Karkus 11:10AM (2/07/2008)
Oh no, the gov't made a bad prediction! Stop the presses!
Who cares? It's a prediction. If they knew what it was going to be, it wouldn't be a prediction.
You make predictions all the time too (like GM selling a million hybrids soon) and sometimes they're wrong.
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Randy C. 11:38AM (2/07/2008)
Here we go again! Those oil producers are starting to see the alternative technologies catch on. Now they are lowering the price again to keep the "oil junkie" hooked up. I only hope America can avoid the same trap we fell into in the past, aka gas prices are moderate lets buy that over priced super wasteful SUV instead of that smaller electric car.
Personally I want to say "good by OPEC". Let's push ahead with BEV and alternate fuel technologies. Get off that "oil needle" and live life oil free, free from the ravages of an oil war, free from the greedy whims of foreign countries and free from pollution provided by the internal combustion engine. Because I know one thing to be true, the laws of supply and demand dictate that the PRICES WILL GO UP! Let's be ready with a good alternative when that happens so we don't have to sit in 2 mile long gas lines again.
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taka 2:29AM (2/10/2008)
Yggdrasilly,
Those folks should be claiming the mileage as a business expense on their taxes. Right now it's something like 45 cents a mile (possibly higher). The government has adjusted this over the past year or so to take into account the higher cost of gas. Thus those folks driving for a living, need not worry (so much) about the additional cost of gas.
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meme 1:06PM (2/07/2008)
I hope to see $4+/gal gasoline... in fall of 2009, when I have my Aptera Typ-1e ;)
Realistically, though, at this point, $4/gal can only be caused by temporary price spikes from unexpected demand changes, wars or civil unrest, etc. There's no shortage of dirty bitumen to produce from.
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john 3:01PM (2/07/2008)
Well i have read that many other countries were paying $5.00 a gallon so if they predict we will pay more i can believe it. http://www.activehybrid.com
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Wise Golden 3:04PM (2/07/2008)
I said in an earlier post about the new car in India that the United States could cause a crash in oil prices by reducing our consumption by as little as 5% (or 1.25% of world supply.) Now we have a story about oil prices dropping as a result of a 2.5% decline in US consumption.
I hate to say it, but it's a sad day. As soon as gas goes to $2.75, we will all stop caring. I've said it before -- I'll say it again; if the government does not get involved and find a way to set floors on the price of oil, we can kiss all of the progress that has been made goodbye. Forget about hybrids, hypermileage, wind, solar, EV's, and bio-fuels because none of them make any sense at less than $3/ gallon gasoline.
I'm old enough that this will be the second time in my life that I've watched OPEC destroy our domestic fuels industry. American oil destroyed it the first time in the 50's, and then OPEC in the 70's and again now.
Mark my words folks -- if our government does not get involved, you will see $40/br oil in under 2 years from today. That will equate to gasoline at $1.50 per gallon.
We could tax gasoline and give it all back in the form of higher deductions. That would keep people on the corse of conservation and yet not harm them financially.
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Wise Golden 3:11PM (2/07/2008)
By the way -- we could still cause that crash in oil prices world-wide. If we reduce by as much as 5%, it's going down! So, not only do they (and you know who they is,) loose 1.25% of their market, but the value of the market that they have drops by 50%. It's a 1-2 punch. Now -- you start talking about a 10% reduction, and you'll be amaized to see what happens in OPEC. They will do WHATEVER it takes to stop this from happening.
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Whopper 3:54PM (2/07/2008)
"We could tax gasoline and give it all back in the form of higher deductions. That would keep people on the corse of conservation and yet not harm them financially."
Hand the government a ton of $ in gasoline taxes and you'll never see a penny back, especially with the Demos in charge. Witness Harry Reid at work blaming the Repubs for holding up the rebates because he wanted to add billions to it. The money would be re-distributed as they deem appropriate (another Alaskan bridge to nowhere).
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Dad 8:02PM (2/07/2008)
If all the folks would car pool one day a week, the amount of fuel burned would drop like a stone. But that is called personal responsibility, something that the world lacks. Better to blame someone else (anyone else) instead of looking in the mirror at the real problem, you and me.
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Dad 8:03PM (2/07/2008)
"12. Dad, We never made a prediction on gas prices."
Neither did I, my comment was meant to reflect the tendency for the folks at ABG to predict all sorts of stuff. Stuff they have no idea what they are talking about. Sort of like the GOV predicting fuel prices.
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