Expectations Driving Gas Prices

Lynne Kiesling

Tim Haab did it, so Mike and I don’t have to!

Yep, gas prices are creeping up again (Click graph to the right).  Why?  Here’s one possible explanation from Bloomberg:

Apparently, non-OPEC suppliers are likely to see their supplies decline over the next year, and OPEC suppliers don’t have the capacity to make up the difference. Improvements in the economy will lead to rising demand, and consequently to rising oil prices, through 2010, and prices today are reflecting expectations of this future relative scarcity. These expectations exacerbate the usual spring price increase due to emissions-driven changes in fuel formulation and seasonal increased demand for driving.

Click through to Tim’s post to see his spiffy gas price graph.

ETA: One of our recent KP posts on gasoline prices was Mike’s post on the subject from February, and back in 2006 I wrote this reprise of some of my earlier posts on the subject.