future gas prices
But while U.S. oil production continues to rise, and gasoline consumption continues to fall, gas prices have remained stubbornly high: The national average was about $3.65 last week.
And that trend is expected to continue, with the United States surging past Saudi Arabia as the world's largest producer of crude oil as soon as 2020. Meanwhile, U.S. gasoline demand is at its lowest in more than a decade - down to 8.7 million barrels a day.
Facts like that have led some pundits to predict falling oil prices. Last year, some politicians were promising that stepped-up U.S. oil production could lower gasoline prices to $2.50 a gallon.
Frustrated U.S. drivers struggling to cope with high gas prices were eager to believe such promises, no matter how unlikely.
Unfortunately, all that new U.S. oil, while helpful in some ways, will not have much effect on gas prices - either now or in the foreseeable future.
"The problem is that prices are not just reflective of new supplies, either too much or too little," explained Money Morning Global Energy Strategist Dr. Kent Moors. "By focusing only on how much is there, these analysts provide a fundamentally distorted view of the oil market."
Why Gas Prices Will Continue to Climb
The average price of gas in the United States is still below the 2012 average of $3.63 for a gallon of regular, but that won't be true for long.
Gas prices have risen every day for three weeks, and motorists are starting to wonder when the surge will end.
Nationwide, the average price for a gallon of regular gas is up 26.3 cents, or about 8%, this year to $3.55, the highest level since the end of October.
And the 17.4-cent spike in the average price of gas between Jan. 28 and Feb. 4 was the largest weekly increase in almost two years.
Unfortunately, it's unlikely gas prices will drop anytime soon.
Why Gas Prices are Heading Higher
With "Big Ben" testifying over the next two days on Capitol Hill, the indices will be bouncing around.
I always find it curious that the same Street urchins who criticize government for interfering in the "free market" are nonetheless the same ones pouting in the corner when the Fed doesn't propose a new bailout to improve their portfolio values.
When my children would pull a stunt like that, they would be sent to bed early... not given a seven-figure salary and benefits.
In any case, that's not the only pouting going on...
A few weeks ago, pundits were claiming U.S. gas prices could be moving down to as low as $3 a gallon nationwide.
Well, these same guys have been quiet lately.
That's because the price has been moving, all right, but in the opposite direction.
The RBOB near-month futures price was up again yesterday (Monday) at market's open. This is the contract traded on the NYMEX for blended gasoline. The price has increased 5.6% in the past week and 11.6% for the month. As of Monday's open, the price had recovered 13% from the recent low, just three weeks ago.
Gasoline is now tracking ahead of the rise in crude oil futures prices.
The reasons are rather straightforward.
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How to Profit from a Drop in U.S. Gas Prices
U.S. gas prices have slipped from their recent peaks of $4.00 and above – is there a profit play here? Indeed, Money Morning Chief Investment Strategist Keith Fitz-Gerald joined Fox Business’ “Varney & Co.” to discuss what’s going on with U.S. gas prices. Watch this clip to hear Fitz-Gerald explain what’s driving gas prices. He also shares two stocks investors can buy to profit from this move – if they act fast.