Wednesday, April 11, 2012

Up like a rocket, down like a parachute

That's how retail gasoline prices move, as you can see in the following graph, which I first posted in A bigger picture on gas prices in Michigan. This behavior is particularly clear on the green curve for Grand Rapids with its sawtooth pattern of rapid rise and gradual decline.

Lately, they've been coming down like a parachute. Since the last time I posted about local gas prices, they fell twice, the first time to $3.95/gallon the first week of March, then to $3.85 two blocks away and $3.87 at the corner gas station. Not only is gas now 30 cents cheaper at the corner station than it was two weeks ago, it is four to six cents lower than it was three weeks ago. That price decrease should be reflected in the average gas price for Michigan, and it is. The state's average gas price fell 13 cents during the past week to $3.90 on Monday, which means it's now below $4.00. Even better, as of today, the price is now down to $3.88. As I wrote last year when prices first fell below this level, good news, everyone, and it isn't a suppository!

I'm a little less confident that my prediction that the long-term trend is still up for the next month or so will hold true, but that isn't stopping others from repeating it. The Associated Press via the Detroit Free Press reports that the Energy Department has predicted that the national average for gas should peak above $4.00 in May and average $3.95 over the entire summer. The government also warned that there was a small chance the price could go above $4.50 between now and August. I have my doubts it will go that high this year. As I've written before, the only way that will happen is if there is war with Iran. I think that's less likely now than it was a few months ago.

As for what the professionals think, they're ambivalent, as oil prices went up slightly yesterday while gasoline futures slid down about a penny. In the meantime, enjoy riding the rollercoaster of prices, especially on the way down.

Speaking of rollercoasters, here's today's song, Love Rollercoaster. Take it away, Red Hot Chili Peppers!


  1. awesome I put-off buying this for months, despite positive reviews.

    1. I'd like to put off buying gas for months, too, spammer.