$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.