Will Gasoline Hit $5/Gallon This Summer?

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Will Gasoline Hit $5/Gallon This Summer?

Bryan Hancock
Investor · Round Rock, TX · Member since 2010 · 8k+ posts · 4k+ votes

Gas is really expensive for this time of year and the dollar is getting cheaper. Will the average hit $5/gallon this summer? If so, what will it do to our economy?

Edit: Title should say GAS...not oil. Hopefully one of the mods can change it ;-)

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Steve Babiak
Real Estate Investor · Audubon, PA · Member since 2009 · 13k+ posts · 8k+ votes
14y

I'd bet it hits that right before that guy in the "Lambo thread" gets his wish :D

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  • Chris Martin
    Investor · Willow Spring, NC · Member since 2009 · 5k+ posts · 3k+ votes
    14y

    For the US average retail pump price, I'm going to go 'no', unless we are in a new war in the middle east. Here's a chart of the past 3 years that shows we are off the highs of last year.

    I do think there will be $5 gas somewhere in the US, though... just not the US average.

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  • Ryan V.
    North East, TX · Member since 2012 · 14 posts · 3 votes
    14y

    I think the only way we'll see $5 gas this summer is if there's a massive escalation of conflict in the middle east. Possible, but not probable.

    If gas goes much over $4.00, without more middle east conflict, it will begin to slow down the economy, putting a break on higher prices.

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  • Shanequa J.
    Realtor · Houston, TX · Member since 2011 · 916 posts · 296 votes
    14y

    Any thing is possible. It's almost $4 now. Ridiculous.

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  • Jon Klaus
    Developer · Garland, TX · Member since 2008 · 8k+ posts · 4k+ votes
    14y

    I agree with Chris that it will hit $5 in some US markets. It wouldn't take much of an Iran event to cause a spike in oil. Plus, the economy is growing a bit faster, so we should see increased demand for gas this year.

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  • Greg B.
    Homeowner · Burleson, TX · Member since 2008 · 756 posts · 376 votes
    14y

    I do know that $4.00 gas was giving my tenants a tough time. A 25% jump over that will cause people to make some tough choices.

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  • Uwe S.
    Property Manager · Dublin, OH · Member since 2009 · 1k+ posts · 291 votes
    14y

    Actual $8.15 in Germany per gallon.

    -Uwe

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  • David Beard
    Investor · Cincinnati, OH · Member since 2010 · 1k+ posts · 928 votes
    14y

    Isn't it wonderful how Iran can rattle their saber and bring a few more billion into their coffers. They have every incentive to foment problems.

    I'll look forward to the day we're not so dependent on carbon-based energy, and crude in particular.

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  • Joel OwensBusiness Member
    Moderator
    Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
    14y

    There are already electric hybrids that use very little gas.More are slated for 2014 - 2015.

    If gas goes any higher and stays there it could be a death knell for suburban areas.More people will move to more dense urban living where they can walk and bike to work to reduce costs to survive.

    Used to there was a small class of the rich,a big middle class,and a small poverty class.Now the rich class is bigger,the poverty is bigger,and the middle class is shrinking into non-existence.

    Costs are going to rise and keep getting worse and worse.I want to be on the wealthy side.In many instances it is getting cheaper for me to eat out then buy at the grocery store.

    I can get a 3 course meal at Red Lobster for 7.99 and get 2 meals out of it.The restaurants are not having to raise prices at the rate of the grocery stores because alcohol sales drive most of the profits.

    If people think it is bad now it is going to get much worse.We need to stop depending on gas for transportation.It's a dead resource on it's way out.

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  • Jon Holdman
    Rental Property Investor · Mercer Island, WA · Member since 2008 · 22k+ posts · 14k+ votes
    14y

    You're exactly right, Joel. NYTimes had an interesting video that gives some reasons why this is happening.

    I think gas prices are pretty unpredictable. If the economy heats up, it will put pressure on energy prices. But the bigger factor will be some "black swan" event. Impossible to predict what or when.

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  • Bryan Hancock
    OP
    Investor · Round Rock, TX · Member since 2010 · 8k+ posts · 4k+ votes
    14y

    That was a very interesting video Jon....thanks for sharing!

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  • Rich Weese
    Real Estate Investor · the villages, FL · Member since 2008 · 5k+ posts · 3k+ votes
    14y

    I'll go with five dollars per gallon average nationwide or higher. Rich

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  • Chris Martin
    Investor · Willow Spring, NC · Member since 2009 · 5k+ posts · 3k+ votes
    14y

    Joel Owens Regarding "If people think it is bad now it is going to get much worse.We need to stop depending on gas for transportation.It's a dead resource on it's way out." For "gas" as in gasoline, I agree. For "gas" as in CNG (Compressed Natural Gas), I disagree. Convert just long haul trucking to use CNG and not diesel and you'll see a price dynamic. It won't happen on its own since the trucking industry just passes on price increases to customers via fuel surcharges.

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  • Tamas Zalabai
    Denver, CO · Member since 2012 · 9 posts · 0 votes
    14y

    Gas in Europe is around $7-8 per gallon. $5 is still not THAT bad.

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  • Jon Klaus
    Developer · Garland, TX · Member since 2008 · 8k+ posts · 4k+ votes
    14y
    Originally posted by Tamas Zalabai:
    Gas in Europe is around $7-8 per gallon. $5 is still not THAT bad.

    Most Europeans don't drive a 4x4 Suburban and a Tundra 55k miles a year. I'm not complaining, but pointing out that we burn far more fuel in the US, for better or for worse.

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  • Tod R.
    Investor · Southlake, TX · Member since 2009 · 950 posts · 338 votes
    14y

    Much of the spike in gas prices is due to speculators in the futures market. It's the dirty little secret of the world's super wealthy that no one seems to hear about. It is not a classic supply and demand issue.

    As I understand, in excess of 80% of all futures contracts in oil & gasoline are not the manufacturers that sell to refineries/retail buyers, its speculative investors that have no intention of taking actual possession of the oil/gasoline. So what you say? Well, the 80% is way out of balance. I believe the ratio is a third each for buyers, sellers and speculators, to keep everyone honest.

    Refineries are operating well under capacity and much lower than the past few years because demand is falling. While demand is falling, oil inventory is piling up. There is no supply and demand problem.

    As long as no one outs these speculators, they will drive up prices every chance they can. Natural disaster, instability in the middle east.

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  • Steve Babiak
    Real Estate Investor · Audubon, PA · Member since 2009 · 13k+ posts · 8k+ votes
    14y

    I'd bet it hits that right before that guy in the "Lambo thread" gets his wish :D

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  • Jake Kucheck
    Residential Real Estate Agent · Costa Mesa, CA · Member since 2008 · 1k+ posts · 380 votes
    14y

    Maybe I'm the only one that's almost at $5/gallon now? You Texas guys have it easy ;)

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  • Jon Klaus
    Developer · Garland, TX · Member since 2008 · 8k+ posts · 4k+ votes
    14y
    Originally posted by Jake Kucheck:
    Maybe I'm the only one that's almost at $5/gallon now? You Texas guys have it easy ;)

    You got that right. We can also buy 5 houses here for every one you can buy in Newport Beach.

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  • Kevin Yeats
    Lender · Fort Pierce, FL · Member since 2009 · 825 posts · 486 votes
    14y

    I'm sure it will be $5 per gal in California ... it probably already is $5 in Hawai'i.

    I would take the "short" bet on the National Avg hitting $5 for more than 2 weeks this year ... but I would not bet much.

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  • Jake Kucheck
    Residential Real Estate Agent · Costa Mesa, CA · Member since 2008 · 1k+ posts · 380 votes
    14y

    Maybe so, but at least no one gives me crap for driving a hybrid SUV out here!

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  • Carlos Flores
    Commercial Real Estate Lender / Syndicator · Dallas, TX · Member since 2011 · 888 posts · 309 votes
    14y

    To add to what Tod is saying, read this article http://www.star-telegram.com/2012/02/27/3765797/oil-the-never-ending-story.html

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  • James Hiddle
    Altus, OK · Member since 2008 · 2k+ posts · 690 votes
    14y
    Originally posted by David Beard:
    Isn't it wonderful how Iran can rattle their saber and bring a few more billion into their coffers. They have every incentive to foment problems.

    I'll look forward to the day we're not so dependent on carbon-based energy, and crude in particular.

    This gets my vote.

    We need to wean ourselves off of oil and into newer and cleaner fuel sources.

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  • Tod R.
    Investor · Southlake, TX · Member since 2009 · 950 posts · 338 votes
    14y
    Originally posted by Carlos F.:
    To add to what Tod is saying, read this article http://www.star-telegram.com/2012/02/27/3765797/oil-the-never-ending-story.html

    Ed Wallace has written some very insightful articles about this.

    http://insideautomotive.com/bizweek-columns.htm

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  • Uwe S.
    Property Manager · Dublin, OH · Member since 2009 · 1k+ posts · 291 votes
    14y

    Dont know which new gas prices in the US, today we had $8.62 per gallon in Germany but i read also about E85 here in Germany its a new gas and comes from the US it cost only $5.46 per Gallon. So my question to all of you: Do you have any experience with E85?

    Thanks.

    -Uwe

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  • Brian LevredgePro Member
    Investor · Chattanooga, TN · Member since 2009 · 1k+ posts · 903 votes
    14y

    Uwe S. E85 is ethanol based gasoline that was being subsidized in the US until somewhat recently. Ethanol was supposed to be an alternative to regular gas but it has since been shown to require more energy to produce than it saves. It's also not as energy efficient as regular gas. Plan to get less miles to the gallon than you otherwise would by as much as 25%.

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