New Retail Gas Price Forecast Calls For More Volatility

In a December 9th post entitled “2012 Forecast is for Stable Frequency” we provided figures from the Energy Information Administration’s (EIA) forecast for retail motor gas prices.  EIA’s forecast for 2012 shows an average of $3.50 with limited variation by quarter.  Tom Kloza’s January 3, 2012 blog entry in Speaking of Oil from the OPIS website suggests that retail motor gas prices are in for a more exciting year. http://blogs.opisnet.com/archive/2012/01/03/huge-price-swings-will-impact-u-s-gasoline-oil-in-2012.aspx   Two of them most significant conclusions in Tom’s forecast are:

1. The high price for the year will occur in the second quarter at somewhere around $4.05.  EIA predicts all of Q2 at $3.57 compared to $3.85 in Q2 2011.
2. Potential for sub $3.00 per gallon prices in the fourth quarter.  The EIA forecast calls for Q4 price levels on a par with 2011 at $3.44.

Although 2012 may not be quite as “lock step” with 2011 as the EIA forecasts for fuel costs and miles traveled suggest, don’t expect a significant ramp up in driving.  Moderate frequency trends should continue.