Gas prices have been falling for five consecutive weeks, defying prognosticators who said the cost would soar to a national average of $5 a gallon.
Tom Kloza, chief oil analyst at the Oil Price Information Service, called earlier predictions of $5 gas prices "apocalyptic," and had promised the folks at AAA that he'd wear a clown costume to their annual meeting if he was wrong. It looks like he won't have to get a costume.
The New York Times in February warned that prices would ratchet up over $5 a gallon if tensions in the Middle East didn't ease. There were worries that Iran was strengthening its nuclear program, but diplomatic talks have calmed those concerns.
So down gas prices came. The U.S. Energy Information Administration on Tuesday lowered its outlook for gas prices through September, saying they should stay around $3.79 on a national average, 16 cents a gallon lower than it had previously predicted.
And the price could keep falling.
"If I were betting in Vegas whether or not gas will be higher or lower on July 4th, I would say lower," said Kloza, whose company provides research and investment information on the cost of oil.
Of course, there are regional pockets where gas prices are higher, like in California, Alaska and Hawaii, where the average price is still over $4 a gallon. But overall, gas prices are predicted to stay flat or decline modestly in the next few months.
Gas prices will, inevitably, keep going up over time. There is a limited amount of oil buried under the ground worldwide, and as the size of the global middle class grows, so will the demand for oil and gas.
Kloza said he's not promising gas prices won't spike at some point this year: When hurricane season arrives, the U.S. is very likely to see another spike. And if there is another increase in Middle East tensions, that could also push prices up. But barring that, prices will likely inch downward.
Declining gas prices are good news for U.S. consumers, who face less financial pressure when they don't have to spend $100 filling up their SUVs. But it's also good news for President Obama, who has faced election-year criticism over rising gas costs.
"The price at the pump, while it's lower now than it was this time last year, is still high," said White House Press Secretary Jay Carney during a press gaggle on Air Force One Tuesday. "It still poses a burden for Americans trying to make ends meet. That's why the president is not going to drop this issue."
AAA spokesman Michael Green said drivers will likely use falling gas prices as an excuse to fall back into old habits. Back in March, when gas prices were rising, the travel group surveyed drivers and found 87 percent of them said they were changing their habits because of fuel costs. They were combining errands into one trip, carpooling, looking for a more fuel-efficient car or taking public transportation.
"This is good news for drivers, because they don't have to change their habits," he said. "It's helping consumers and providing welcome relief."
And drivers will likely stick with their summer travel plans. Dan Lennon, vice president of marketing and public relations for Branson, Mo., Chamber of Commerce, said his group monitors gas prices closely, since 90 percent of the 7.5 million visitors to Branson each year drive there.
With gas prices moderating, Lennon said he expects the crowds will be slightly higher this summer, compared with last summer. Visitors who come to Branson for the live shows or amusement parks are generally folks who are doing well enough financially that they can absorb higher gas prices. And if they don't have to spend more on gas, they'll likely spend more while in town.
People appear to be getting accustomed to higher fuel costs. The Chamber of Commerce surveyed people earlier this year to find out what price per gallon would force travelers to stay home. The average response was $4.69.
"We've already been to $4 a gallon in 2008, so it doesn't have the kind of impact it once did," he said. "A couple of years ago, the response would have been $3.25."
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Posted: 05/09/2012 9:56 am Updated: 05/10/2012 8:38 am