Gas prices likely to stay low during the recession

By David Alexander
Western Herald

As gas prices continue to drop to their lowest in four years, students can’t help but wonder whether this trend will continue over Christmas break or whether prices will once again soar as they did over the summer.
According to MichiganGasPrices.com gas prices are their lowest since early Dec. 2004. But will this trend continue through the holidays? Can gas possibly get much cheaper? There are several factors that affect the price of, not just gas, but, any commodity.

Since the United States has fallen into a recession, gas price have seen a decline in recent months.
“It’s a matter of forces affecting supply and demand,” Western Michigan University professor of economics Bill Kern told said in an e-mail.

“Around the holidays we usually have some increase in demand due to holiday travel increasing, but we also have the current state of the economy which is driving down gas prices as economic conditions have deteriorated thus decreasing the demand for oil,” he said.

American Automobile Association spokesperson Jim Frink said that gas prices have been decreasing steadily for several months, and that we may be near the plateau.

“It’s possible that oil price could continue to fall and level out around $1.50 a gallon,” Frink said.“[There has been] a global economic slowdown. Everybody is reducing their energy consumption as a result. Travel [was] down slightly for Thanksgiving so it would be reasonable to expect that it would be down for Christmas and New Years.”

According to Michigangasprices.com, as of Dec. 7 Michigan’s prices were lower than ever at $1.583 per gallon here, and $1.737 in the U.S. This is compared to gas prices here a year ago at $3.015 per gallon and $2.761 in the U.S.

But the amount that one may fork out at the pumps is still a bit of an unpredictable situation.

“There is no way that anyone can accurately predict future gas prices,” WMU professor of economics Emily Hoffman said, “My best guess is they will stay where they are now, in a range of $1.70 to $2 [per gallon].”
Considering Michigan’s 9.3 percent unemployment is significantly higher than the 6.7 percent national average, it doesn’t appear that the economy is seeing a revival just yet.

“Given that the economy does not show much sign of improving I would put my money on prices staying around their current levels through the holiday period,” Kern said.

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Posted by HeraldAdmin on Dec 7 2008. Filed under Nation, News. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry

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