Real Gas Prices

Gas prices surged in 2008, causing a number of commentators to conclude we would soon run out of oil. Prices, of course, came down. And as I’ve blogged before, we won’t suddenly run out of oil.

I put together a graph of real gas prices (inflation-adjusted) in the United States during summer months since 1990 (data courtesy of the Department of Energy and Bureau of Labor Statistics).

Prices were roughly constant from 1990 until the early 2000s. Speculation, growing international demand, and a booming domestic economy then combined to drive up the price of gasoline. The main reason prices have fallen since last year is that gas demand and speculation has weakened since the onset of the global recession.

Nonetheless, gas prices have been creeping back up. Current prices are lower than they have been during the last three summers, but they’ll probably go up a little more through the rest of June and July. Seasonal gas prices have historically peaked in late July.

I’m predicting prices will peak this year at just under $3.00. Anyone want to bet?