Don’t Get Excited Just Yet At Falling Gas Prices!

If you breathing a sigh of relief on the recent drop in gas prices, then I wouldn’t get too comfortable with the extra money that’s swimming around in your pocket. Since July 17, gas prices have dropped about 25 cents, giving our economy a little bit of a breather. The good news is that some analysts feel that gas prices will fall even further in the coming months.

The bad news is that gas prices have just as much reason to rise as they do to fall. The answer, don’t get too comfortable with the falling prices. If you’ve been using techniques to save money on gas, then don’t stop what you are doing. Take the money that you have saved driving economically and take the money you are saving at the pump and bank it, for a rainy day! Gas prices will eventually rise again, and they will be higher then before.

If you remember over the past couple of years gas prices have spiked and then drifted back down; each time gas prices rose back up they would soar even higher. Ok, here is an example of what I mean: in the summer of 2006 gas prices rose to just over $3.00 a gallon, and then fell to $2.20 a gallon. In May of 2007, gas prices rose again to $3.20 a gallon, before they fell below $3.00 a gallon for the rest of 2007. In 2008, we saw gas prices rise to a national average of $4.11 a gallon, before they started to fall in July.

Do you see the pattern? Maybe $4.11 will really be the peak, and it’s downhill from here. Many analyst thought that $3.00 would be the magic number and gas prices would not rise above that; and then $3.20 would be the peak. So pick your poison. Some experts say that gas prices will continue to fall another 50% and some are claiming that there are much steeper gas prices ahead.

Consider this, General Motors is assuming that gas prices will stay at $4 a gallon. And experts at Toyota are betting that gas prices will rise to $5 or even $6 a gallon by 2010.

Let’s face it the economy is sagging and lower gas prices are the result of people getting rid of their big gas guzzling SUV’s. To top it off, people are driving less, U.S. gas consumption has fallen this year for the first time in decades and gas prices are finally falling.

The U.S. economy will eventually rebound, and if economics holds true, then oil prices will once again rise; and who knows how high it will go this time.

Another point to ponder is that cheap gas raises our addiction to oil and leaves little incentive for people to by hybrids. Automakers are also less likely to invest in new technologies that could someday replace gasoline. Paying $4 a gallon for gas is a pain in the wallet, but it does have its benefits. It strengthens the market for fossil-fuel alternatives; automakers are also in a race to invent the first plug-in hybrids, electric cars and hydrogen powered vehicles. The more costly gas is, the more quickly these alternatives will arrive.

We as consumers cannot do anything to raise or lower gas prices. Although, we can make a decision to drive like we just filled up our tanks with gas that costs $4.11 a gallon, even though it didn’t.

Just some food for thought!