Will Gas Get Cheaper? Or How About Five Dollars A Gallon?
All the "experts" can't get their ducks in a row. Will gas get cheaper, or will it get way more expensive? No one knows. No one is even CLOSE to knowing.
One expert says gas will get way cheaper since oil will fall to $25 a gallon. Another says $5 a gallon is on the near horizon. What does he know that other don't?
""The triggering mechanism will be global demand growth relative to how much capital constraint gets baked into future plans for production this year and next. If new production capital is deferred and demand growth continues at 2% or more, we'll see capacity constraints during 2016, an election year of course, drive prices higher. Whether we reach $4 a gallon or push past, it's too early to tell."
Moreover, Hofmeister still sees $5 gas on the horizon. "Over the next several years, as demand growth approaches 100 million barrels a day and the industry production falls short, yes, I believe later this decade we'll see $5 a gallon and possible shortages of fuel in some parts of the world," he said.
Hofmeister paints a gloomier picture of gasoline prices than many analysts, including the U.S. Energy Information Administration, which predicts U.S. gasoline prices will average $2.33 this year and $2.72 in 2016. But he also feels that the perception of a "glut" in world oil production now is overstated, with supply outpacing demand by only 1 million barrels a day or so.
Some of his former peers in the oil sector share his sentiments regarding the oil oversupply, and its impact on oil prices. "Most of us in the industry are surprised that it's fallen as hard and fast as it has," Ryan Lance, CEO of ConocoPhillips, said at a Center for Strategic and International Studies. "I don't know that I have a real good answer to that question, other than it doesn't feel like the fundamentals would support that kind of fall."
Dang. Now I will have to sell my 6 mile per gallon Mega SUV. Or not. :)