Posted in: Gas Prices,
by Patrick DeHaan on Feb 21, 2011 11:58 AM
Evaluating last week's prediction for this week, I said "I expect that by next Monday, we'll see that U.S. national average rise to $3.15/gallon, while prices in Canada will fall to 113.7c/L." Looking at our latest GasBuddy pricing data, we show the U.S. average at $3.167 per gallon while prices in Canada are coming in at 113.2c/L. I'm surprised that the U.S. average rose faster than I expected, but I suppose that shouldn't be too much of a surprise given how much gasoline futures rose last week.
On to this week! Again, the Middle East and concerns of instability are driving crude and gasoline futures up already today. NYMEX/WTI oil is up nearly $4/bbl to $90 while Brent crude is up $2/bbl to $104/bbl. I continue to be asked why what's going on over in the Middle East continues to drive prices, especially with high supply.
I'd say that the advances in oil prices are largely in speculation that problems will spread in the Middle East, and at this point, that possibility looks very real. We've already seen the turmoil spread from Egypt, and today, Iran is sending two ships through the Suez. While that in of itself shouldn't be a large situation, the media is certainly helping drive the fear we're seeing on the market.
Of course, speculators are getting back in the market hoping to make a profit if something does happen in the Middle East. However, there is a lot to lose if nothing happens as supply remains healthy here in the U.S. and Canada. However, sensibility and supply and demand haven't been the key behind oil prices in sometime. Long gone are those days it would appear. There's more of a chance that the Cleveland Cavaliers make the playoffs than oil prices being dictated more on supply and demand than outside influences.
Having said that, this week will see additional increases. There are five states left that have gas price averages under $3/gal. I suspect by next week, that number may be halved. The motto will again be get gas sooner rather than later.
By next Monday, I predict the price average in the U.S. will rise to $3.21/gallon while prices will rise to 115.2c/L in Canada. We haven't seen prices that high since October of 2008. Prices may also rise again in Speedway States by tomorrow- we'll keep our eye out and e-mail alerts if necessary.