What Should We Expect from Gas Prices This Year?

Jan 07, 2015 04:30 PM EST | Jordan Ecarma


Americans have been enjoying cheap gas as the price of crude oil continues to fall. During the last half of 2014, gas prices fell to their lowest in four years nationwide, a boon that is believed to have boosted December auto sales.

An oil analyst has estimated that the oil market must be close to bottoming out but couldn't specify when that would happen--because crude oil just keeps falling.

"You keep looking for it and each bottom brings another trap door," Tom Kloza of the Oil Price Information Service told the Los Angeles Times.

Even though crude oil prices are expected to surge again in the second half of the year, they aren't predicted to result in gas that costs more than the highest prices in 2014, the L.A. Times reported.

The government has forecast an average national gas price of $2.60 in 2015, which would save Americans around $100 billion this year.

In an exclusive phone interview with the Detroit News, President Barack Obama has put something of a damper on that enthusiasm, cautioning buyers not to depend on low-priced fuel.

"I would strongly advise American consumers to continue to think about how you save money at the pump because it is good for the environment, it's good for family pocketbooks and if you go back to old habits and suddenly gas is back at $3.50, you are going to not be real happy," Obama told the News.

For the long term, China, India and other emerging economies will cause oil demand to increase, driving up gas prices, the president said.

"Just demographics tell us demand is going to continue to grow, that over the long term it will grow faster than supply and we have to be smart about our energy policy," Obama told the News.

Gas prices in the United States closed out 2014 at their lowest levels since May 2009, according to the U.S. Energy Information Administration. The average weekly retail price for gas was less than $3 per gallon for the first time since February 2010 as of Dec. 12.

Cheaper gas likely affected auto sales, as trucks and sport utility vehicles with lower fuel economy outsold other models in 2014.

So will gas prices continue to fall? Analysts are predicting that the price of crude oil will stay low for now, meaning that cheap gas should be the norm for a while.

"We see [oil] prices remaining weak for the whole of the first half" of this year, Gareth Lewis-Davies, an analyst at BNP Paribas in London, told Bloomberg

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