If you've been asking where gasoline prices will be going this autumn and winter, you aren't alone. In fact, so many are asking, that we're posting this publicly to let everyone know that we are, yes, working on a late-2012 gasoline price forecast, and do expect it to be complete in the near future.
Many are also asking what goes into making a forecast, and how analysis of such is possible. I'll seek to answer a bit of how I forecast gasoline prices.
First, experience and past history comes in to play. Before making a forecast, I pour over my past forecasts to see how they played out. How close were we to previous forecasts. Looking at our summer gasoline forecast, which was released in January, we had many of the numbers very close, but in some cities, we could use improvement. The national average we had forecast to be between $3.75-$4.15 come Memorial Day, and quite surprisingly, it was less than that at about $3.68. What changed from the time we created our forecast back in January? That's one piece of analysis.
The second major input is fundamentals. How much oil is being produced globally? Is it increasing or decreasing? How much oil is going to be consumed globally- will it rise or fall? These are all pieces used to determine gasoline prices.
A good forecast includes and attempts to make sense of geopolitical tensions, due to the possible impact that such tensions can create on gasoline prices. Libya caused the national average to spike virtually overnight. While the specific event was not forecast, we did forecast an uptick in prices before it happened. That part may have been sheer luck.
Having said all of this, the economy here, and globally, is quite volatile with mixed news on economic improvement. With the stakes high- demand- and supply, it makes forecasting much more difficult. We strive to be accurate, so that our spotters and members can make use of our forecasts, budgeting expenses based on our forecasts.
When we do unveil our forecast in the near future, we expect to have a good feel for where prices are going. While I can give you a sneak preview and let you know prices won't be flirting with record highs in this next forecast, they won't be flirting with record lows, either. It may be a middle of the road forecast, but compared to what you're paying today, it may be delightful.