$5 gas is a bold prediction that will surely be wrong

By Erin Mulvaney
Houston Chronicle Staff Writer

If you Google $5 gas, you are bound to find millions of articles predicting historic gas prices this summer, but a gasoline analyst says you shouldn’t believe those predictions.

Tom Kloza, chief analyst with Oil Price Information Service, noticed the numerous $5 gasoline predictions in the media recently, but he said $5 gasoline prices aren’t likely to take a hold nationwide. He said the experts predicting $5 gas aren’t any more accurate than famous predictor Nostradamus in the 16th century.

“Many of the stories quote ‘experts’ who give the skinny or the scoop on why this will be the year that Americans need Lincoln’s picture on the legal tender necessary to purchase a gallon of unleaded fuel,” Kloza wrote in an email. “Let me make myself perfectly clear. This is nonsense.”

So what are the chances of $5 gas this summer?

“The chances of nationwide gasoline averages approaching $5 gal are about as good as having the Spice Girls perform a tribute to Demi Moore at the Oscars,” Kloza wrote.

Former Shell executive John Hofmeister has been beating the $5-per-gallon drum for more than a year. Hofmeister said gas prices are likely to rise because of rising tensions with Iran, refineries closing in the northeast and ongoing fallout from the Gulf of Mexico moratorium.

Hofmeister said the current administration policies have also caused gas prices to rise, and those policies are unlikely to change in time to ward off $5 gas.

Kloza provided a chart showing the gas prices since 2000, and he said it shows while $5 is unlikely.

Year          Valentine’s Day Price          July 4th Price

2000                           $1.36 gal                           $1.65 gal

2001                           $1.49 gal                           $1.49 gal

2002                           $1.21 gal                           $1.40 gal

2003                           $1.64 gal                           $1.49 gal

2004                           $1.64 gal                           $1.89 gal

2005                           $1.89 gal                           $2.27 gal

2006                           $2.29 gal                           $2.93 gal

2007                           $2.23 gal                           $2.95 gal

2008                           $2.98 gal                           $4.10 gal

2009                           $1.97 gal                           $2.62 gal

2010                           $2.62 gal                           $2.74 gal

2011                           $3.13 gal                           $3.57 gal

2012                           $3.51 gal                              ???

The chart shows that a bubbling and re-bubbling of gas prices, similar to those seen in the housing market in the late 20th century and early 21st century, Kloza wrote.

The chart also shows that record-high gasoline prices in 2008 rose 34 percent between Valentine’s Day and the July 4th weekend.  Kloza added:

The Giants also won the Super Bowl in that year, and perhaps that will be the talisman that trumps macroeconomics, consumer fatigue, demand destruction, and healthy global supply of gasoline. If Giant’s Super Bowl  victories are a harbinger and a similar spike is in store, the arithmetic adds up to an average gasoline price of $4.70 gal on July 4, 2012.

So you shouldn’t worry too much about $5 gas or believe everything you read on the internet, Kloza writes.

He  said gas prices are likely to settle between $3.75 and $4.25 per gallon at the peak in May before falling in later half of 2012.

43 Comments

  1. Sam

    Because of the success of the likes of Solyndra and electric cars! Yeah team!!

    #1
  2. Sam

    Headline: “$5 gas is a bold prediction that surely be wrong”

    That grammar “surely be wrong”.

    #2
  3. Bob

    I blame Obama. I also blame him for the 50% increase in the Dow since he took office and the renewed economic growth we are seeing. Increased growth and demand will push up fuel prices.

    #3
  4. established.facts

    Hear the case against gas getting to $5 huh ?
    when that happens , gather those who made it possible and take them to the hanging tree !

    #4
  5. Paul

    $5 or $4.70, does it really matter? Prices have almost double since Obama took office. Each year his policies have helped increase the price at the pump more than any time in the last decade. Just look at the chart. An Ave yearly increase of .51 a gallon.

    Increase
    2009 $1.97
    2010 $2.62 $0.65
    2011 $3.13 $0.51
    2012 $3.51 $0.38

    Ave $0.51

    Has any POTUS ever pushed for gas to cost the more? This doesn’t hurt the 1% he is always complaining about. This hurts the middle and lower class.

    #5
  6. Pat

    In before the wing nuts blame Obama, gays, Muslims, women, and minorities for high gas prices.

    #6
  7. MrOldMan

    “He said gas prices are likely to settle between $3.75 and $4.25 per gallon at the peak in May before falling in later half of 2012″ – Man, what a relief. I thought I might actually have to cut back on driving. lol

    #7
  8. James

    Is this an article for junior high school students?

    #8
  9. Reginald

    Wow! the chart shows jus thow bad Obama’s policies have been for our country. Prices on everything goes up when the cost to transport goods and services go up. Obama has to go, he has been a complete failure no matter how you look at it.

    #9
  10. Oil Shek Obama

    It’s Bush’s fault! Opps, can’t use that one any more.

    #10
  11. Slider

    Vertical trust much?

    #11
  12. Dan

    The ‘predictions’ are just to prepare y’all motorists to stay bent over at the gas pump. When these oil bandits get through with you, you might as well not even wear your pants at the pump.

    #12
  13. don

    . . . I like to go to the Bloomberg site and see what the experts predict about everything. . . .they rely on historical information and try to make judgements about the future. . . .

    Sometimes, they are correct. . . that’s the nicest way to say very oftern all are wrong. . . .

    $5.00 gas can come in a blink . . . if Israel attacks Iran and war breaks out. . . . the SWIFT decision to cut off Iran might be another trigger. . .I don’t know what the price of gas is going to be. . . but neither do any of the “experts”

    #13
  14. David Gower

    Tell Mr. Kloza that gasoline went up 6 cents overnight in my area of Houston. As gasoline goes up there is less and less money available for the rest of the economy.

    #14
  15. Mickey Mantle

    Just get the Democrat out of office or be ready for more increases. Wait and see. We have seen it now and it will happen again. Be like an ostrich with your head in the sand or wise up.

    #15
  16. cxf

    It’s no secret, $4 and higher gas cripples this nation.

    #16
  17. JonC

    Is this supposed to be a serious article? Has the writer graduated from high school yet?

    #17
  18. Bart-1

    OK, maybe my math is wrong, so help me out here. Tom Kloza, chief analyst with Oil Price Information Service, said “are likely to settle between $3.75 and $4.25 per gallon at the peak in May before falling in later half of 2012.” He then posts a chart showing Valentine’s Day prices to 4th of July prices. 2008 had a $2.98/gal to $4.10/gal or a $1.12/gal increase. I get that being a 37.5% increase. So a $3.51/gal 2012 price should become a $1.32/gal increase or $4.83/gal. Even if Kloza used the dollar amount increase, and NOT the %-age increase, how does he predict $3.75/gal to $4.25/gal? If prices “peak” in May as he claims, why use 4th of July prices on his chart? Anybody help me out?

    #18
  19. s3

    Sounds like they’re whipping people into a frenzy just in time for the fracking debate.

    #19
  20. pjLady

    Our Federal Government needs to enact legislation outlawing energy trading. A middle man should not be allowed to hijack the price of fuel in the United States.

    #20
  21. Adler

    Obama and his boy Bernacke are totally reposnsible for the price of oil being where it is and that directly impacts the price of gasoline. When the Big Zer0 took office, gasoline was hovering around $1.89 becasue oil had collapsed all the way to $44.50. It was Obama and Bernacke who decided to monetize some of the federal debtby printing more currency. By then, AUG 10, when they finally admitted to printing an extra $1.3TRILLION, gasoline was up to the $2.70 range. Why? Monetizing debt devalued the US dollar. Because oil is traded in dollars, the effect on the price of oil was nearly an overnight jump of 17%.

    Then you have Owebama’s war on the petroleum industry which has prevented or slowed US energy production.

    If gasoline gets to $5 you can lay the blame squarely on the Idiot-in-Chief’s sholders.

    #21
  22. Bumpus

    The price will climb because gasoline is the USA’s biggest export item and exporting it from the USA keeps the availability and price high. The price will probably quickly fall after the election.

    #22
  23. Charles

    Where is all the national furor over gas prices that prevailed during the ’08 election? It became brazenly clear that our voices made a difference, why the papthy now?

    #23
  24. The gas companies are at it again, they push the price of a barrel up at the drop of a hat, the mention of the middle east and it goes up. The summer blend is another excuse. Yet we pay and they make record profits. They close refineries for repairs up goes the price. Our imports have dropped but their profits have not. They got us with a gun to our heads because there is no other fuel for cars. Best thing the government could do is break up the monopolies so the competition is there like it was in the past. No competition today just high fuel prices.

    #24
  25. Barry

    Bob, actually, gasoline demand is DOWN….

    Please see this chart:

    http://1.bp.blogspot.com/-p8JX_24dGIc/Tz0YdA5bi3I/AAAAAAAABHQ/xpGHlsKRiLA/s1600/ScreenHunter_02+Feb.+16+08.52.gif

    And quoting an article on this very subject:
    “this data is interesting because it is un-manipulated, that is, it is not “seasonally adjusted” or run through some black-box modifications like so much other government data.”

    http://www.zerohedge.com/news/guest-post-why-gasoline-consumption-tanking

    <<<>>>

    Maybe there really ~isn’t~ the increased growth and demand you give Obama credit for… ;-)

    #25
  26. Bart-1

    Charles, regime change. Obvious double standard.

    #26
  27. MrSilly

    A couple of points.
    1. Oil and refined products are a global commodity, keep in mind that countries in our hemisphere subsidize fuel prices so heavily trying to insulate their people from reality that it pushes refined product costs beyond mere consumer supply and demand economics.
    2. The US exported more refined hydrocarbon products in 2011 than anything in the entire economy. It is somewhat one dimensional to assume one person or country is responsible for the run up in prices. We must comprehend that prices of fuel are determined by a much broader market than simply the “Big Three” trying to “put it to” the US consumer.

    #27
  28. USA! USA! USA!

    #28
  29. tanstaafl

    I’m hoping for a Republican president in 2013, but if you think this will result in lower gas prices, well, good luck with that. Better check with the Chinese.

    #29
  30. Observer

    The price gouging by Big Oil in raising gas prices is somewhat troubling but not nearly as much as the price gouging implicit in the record profits for Government Motors.

    Isn’t it obvious that if GM can report such profits that it should sharply reduce the prices it charges for its products? After all President Obama is the man who can call the final shots with respect to pricing policy given the billions of dollars lent to this company at virtually zero interest rates.

    We all know how he feels about obscene profits and has vowed to end them. However, in the case of his auto holdings, he seems to think that such profits will result in doubling the price of GM stock at which level he can sell the U.S. holdings and get out without a loss.

    Well, he has badly miscalculated since the UAW will soon be demanding much bigger shares of GM revenues for its members in the form of wages and benefits. Further, a substantial portion of such profits were generated in the Peoples Republic and newly imposed restrictions on earnings transfers and taxes being imposed by the Chicoms on an ad hoc basis on such earnings seem certain to reduce the final sums realized in the U.S. by GM.

    P.S. Historic data on gasoline prices can be interesting and these data would have been much more relevant if they reported prices and availabilities (fights at the pumps over scant supplies coupled with long lines and rationing) during the 1970 Arab Embargo in crude shipments following U.S. support of Israel despite Arab warnings. Oh and be certain to adjust such prices for the depreciation of the dollar over these past forty years or so.

    #30
  31. kegger

    Yep, let’s use Nostradamus to predict prices, instead of basic MATH. Most gasoline is refined along coastal refineries. That crude input price trades closer to Brent than WTI. That price is $120/bbl. The May 2012 futures indicate a price $.20/gallon higher than today for gasoline. Add in the risk of supply disruption from Iran and $5/gallon is a very high possibility for the US Northeast and California. Yep, the states that vote for Obama and block the Keystone pipeline that moves that cheaper WTI to refineries in the gulf coast is blocked by Obama. Stupid is what stupid does.

    #31
  32. EricD.

    You can do everything in your power to make the oil companies happy, and they will accept everything that you do for them, but they will not give you cheap gasoline in return, that’s not how the game works. Every single quarter they make billions in profit, the figures are staggering, and I am not talking gross revenues, I mean profit. Every year we go through the same carousel of fake reasons why gas prices need to go up. Put the blame where it really lies instead of where you might wish it lies, otherwise you sound foolish.

    #32
  33. Chuck

    With Obama in office, $6 a gal will be more like it.

    #33
  34. Bill in Houston

    Five bucks a gallon is actually UNDERSTATED.

    Obama must go.

    #34
  35. Bart-1

    April 25th, 2008. Obama blames US presidents ever since Nixon in the 70′s for increasing gas prices and promises that he would rein in higher gas prices when HE is in office(besides implementing a middle class tax cut). But now, people are quick to decry any such blame for higher gas prices to his administration. http://www.youtube.com/watch?v=dnLP12X3EgM This article originally made the claim that a so-called expert that $5 gallon gas SURELY would never happen. It has been changed for obvious reasons. It is not unlike the “experts” who predicted with “virtual certainty” that last summer’s drought would continue through this Winter, Spring, and early Summer. http://www.texastribune.org/texas-environmental-news/water-supply/texas-drought-continue-through-spring-experts-warn/
    Bookmark this article when gas hits $5 a gallon and ask Kloza about when the Demi Moore tribute by the Spice Girls; at the Oscars nonsense starts! But don’t blame this President even though he blamed everybody else last election.

    #35
  36. Dan

    Nevermind wondering if gas will get the $5/gallon … the more you wonder, the more the oil bandit scumbags will raise the price. Just keep bent over at the gas pump … When it gets to $6/gallon, you can ask the gas station for your complimentary tube of K-Y Jelly.

    #36
  37. L

    Moderators: Apologies for the curse words. Here’s a clean one.

    I’m sorry, did no one notice that this guy just tried to use a football team to justify his prediction of gas prices? Who writes this crap? And did you idiots just suck that right up in your haste to make a political discussion out of this?

    Secondly, a failed business model, outdated technology, and speculation make for expensive gasoline, not a president who happens to be someone you don’t like. FYI the market takes care of the market, the president doesn’t take care of the market. And the market certainly doesn’t take care of the president.

    #37
  38. rat618

    Will one of you clowns explain how Obama is to blame when the demand is at its lowest level since 1997?

    http://www.businessweek.com/finance/rising-gas-prices-not-demand-driven-02142012.html

    But if you look deeper into the article you see that future prices are higher than ever….seems like speculators are the real culprits here. Oh and closing 3 refineries hasn’t helped keep the prices down. Just imagine what the prices might be with no speculation and those refineries open.

    And Obama isn’t the first President to see $4 gas prices. Try watching what was said back in 2008. That isn’t Obama behind the POTUS podium talking.

    #38
  39. henrygates12

    Brilliant, really. Gas has doubled in under a decade. So scare the masses with $5 or $6 predictions. Then when gas is an outrageous $4.50, the people will thak you for it.

    #39
  40. Paul

    The powers that be want higher gas for several reasons. We should be using natural gas but those in control will not let it happen.

    #40
  41. Gassed

    The prices will magically fall right before the November election.

    #41
  42. Mick Russom

    Its $5 for 87 in some places now.

    #42
  43. Mikey

    There’s one in every crowd…..someone always chimes in with that scientific/economic mumbo jumbo about supply and demand and how the market dictates the price of gas and we can’t blame it on politicians. We’re not dumb..we know it is market driven, but can’t you just let us complain about politicans without bringing in that argument. it sounds so much better and it is a lot more fun to blame everything on politicians. Please let us live in our fantasyworld where supply and demand doesn’t exist and we’re happy and dumb and can complain and blame whomever we want.

    #43