Gas Prices Could Fall 10-15 Cents Before The End Of The YearTuesday September 2, 2008
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It has been a long, long time since you've heard this statement: the price of gas is expected to go down.
A lot.
After Hurricane Gustav spared oil platforms in the Gulf of Mexico and the traditional summer driving season disappeared with the Labour Day long weekend, the cost of crude has deflated drastically, a downward spiral that actually started in July. And now those in the know are predicting it could be down nearly 4 cents by Wednesday - and a full 10-15 cents by the end of the year.
That could see prices at $1.05 or $1.10 a litre for regular. If it happens, it will the lowest price in the GTA since last March, when were shelling out $1.03 a squirt - and complaining that was too high.
Gas guru and MP Dan McTeague advises that the pump price drop should be 3.6 cents after midnight to about $1.26. Not good, but considering predictions last week that a Gulf disaster might have raised those costs as high as $1.75, it's a huge difference. And that could be just the start. Check out
McTeague's early warning website, here.
Crude prices had hit an unheard of high of $147 a barrel as recently as July. Since then, they're down significantly, closing Tuesday at US$109.71 - about a 25 per cent drop. And some analysts expect them to fall as low as $100 per barrel in the coming months.
Some are crediting a rebound of the U.S. dollar with the turnaround. Others are giving Gustav's glancing blow the credit. "The storm hasn't been as bad as people feared, so we've seen some of that fear in the market come off," explains TD economist Craig Alexander.
But it's more than just the weather that's blowing this good fortune our way.
"I think an awful lot of that pullback has been related to global demand," Alexander notes. "What we've been seeing is very weak conditions in the United States have reduced demand for oil and gasoline; but then adding to that, we're now seeing very clear signs that China is slowing down, that the global economy isn't as strong as people had thought. And so this has also led to a more fundamental pullback in oil prices beyond just the concerns about the storm."
His utlimate best guess? "We could see $1.05 to $1.10 at the pumps before the end of the year."
All of which is great news for motorists like Mike Cross, who fills up every four days. "I work downtown, and I come from outside the city, and you know, spending 60 to $70 a week just on gas alone," he laments.
As for the reduction prediction? He remains skeptical, taking an 'I'll believe it when I see it' attitude. "I hope that happens," he muses. "But it seems that every time that they say that's going to happen, something else will come up or it never comes to fruition."
And he could be right. The oil market is a roller coaster, easily reacting to the stomach churning ups and downs of the world economy. And despite the best guess of the experts, it's also highly unpredictable - a military conflict in a world hot spot or more bad weather can change things in a heartbeat.
And while Gustav gave the Gulf a pass, there are still several more months left in the hurricane season down south, with new storms Hanna and Ike both gathering strength with no sure track yet of where they'll be headed.
So far now perhaps the best advice is when you see gas go down, top up. Because you never know what tomorrow will bring - although you hope it's a better price.
