Are gas prices about to take off?

Prices at the pump have been dropping for months. Industry analysts are trying to gauge future movement, but say the 'fiscal cliff' could be a determining factor.

By Bruce Kennedy Dec 28, 2012 2:42PM

Image: Gas prices (Photodisc/SuperStock)Has the easing of prices at the pump been a final holiday present for consumers, or just part of the annual cycle of supply and demand?

Gas prices have been dropping for months. Several cities even reported unleaded gas dipping below $3 per gallon over the holidays, but in recent days the price of gas has been creeping up. The national average for a gallon of unleaded was $3.28 Friday, up from $3.26 Thursday and $3.23 a week ago, according to AAA.

AAA singles out several factors for the decrease in prices this fall and winter: larger gas inventories, lower crude oil prices, less demand for gas during the winter months as well as a switchover to less-expensive winter blends of gasoline. The ongoing economic downturn is also having people think twice about how often they find themselves at the pump.

But prices are due to bottom out sooner or later. And now, with crude oil prices firming and continued political and economic uncertainty, the market is apparently at a crossroads.

"Whether gas prices continue to rise or again turn lower will be impacted by action -- or inaction -- in Washington surrounding the looming 'fiscal cliff,'" said AAA’s Avery Ash in the Association's latest Fuel Gauge Report Overview.

"If a deal is reached before the end-of-year deadline it will likely be seen as positive for the U.S. economy, which could send crude prices and gas prices higher. If a deal is not reached, markets are likely to slump and gas prices could go even lower."

But other observers believe the trend is for gas prices to rebound as they usually do in the new year.

"It's happened six out of the last seven years: The national average has risen between Christmas Day and Jan. 15, and this year there's no reason to believe now that this won't happen again," says petroleum analyst Patrick DeHann in his blog.

And you can also throw into that mix new projections by the U.S. Energy Information Administration for 2013 and beyond.

The EIA is expecting greater domestic energy production, particularly of crude oil, to continue -- with overall gas consumption to be lower next year. The a.gency says the introduction of stricter fuel economy standards in new vehicles, along with the increased use of natural gas in heavy-duty vehicles, should also have a lasting impact on gas and other energy sources.

These changes, said EIA Administrator Adam Sieminski in a press release, show how "evolving consumer preferences, improved technology, and economic changes are pushing the nation toward more domestic energy production, greater vehicle efficiency, greater use of clean energy and reduced energy imports."

More from Money Now

Dec 28, 2012 5:51PM
actually, if everyone could somehow not buy gas at all for just 2 days, that would be a major blow to them.  Millions of people not buying any gas, wow talk about hitting the pocket.
Dec 28, 2012 5:44PM
Bull C   R  A  P.  when you have companies making billions in profits, you're not going to sit down and tell me that the demand is high or crude oil prices are going up.  We are not stupid.  Our hands are tied behind our backs and unfortunately, we can't do much about it.  Get rid of the speculators that drive this fictitious number up.  
Dec 28, 2012 5:40PM
thats ok.  i will just drive my economy car.  kids complain that its small but at almost 40 mpg who cares.
Dec 28, 2012 5:38PM
we all speculate,wish and want but nothing ever change.The gas company are own by the mega rich and they need their profit magins.They don't give a hoot about you,me or anyboby. the only thing we can do is grin and bear it.
Dec 28, 2012 5:30PM
Let the raping and pillaging begin........ again!  There is no stopping them now - they smell blood and will start moving in for the kill. Americas largest group of above the law racketeers are back in session and are now contemplating the best way to screw the people some more while retaining their bought and paid for status with their "alpha owners". Good luck all - it won't be much longer. 
Dec 28, 2012 5:28PM
it is all abut greed , oil companys are not making enough so they make it look like oil buyers are buying in realty it they who jump the price
Dec 28, 2012 5:27PM

How does a state succeed from Washington DC?? Let the SOBs fend for them selves

I’m tired of being a victim of Obamas and Hairy Reads pawnsie schemes

Dec 28, 2012 5:08PM
Simple the election is over....time for business as usual.
Dec 28, 2012 5:01PM
May or may not be of importance to many of you folks however we shop at Fry's Marketplace in Arizona. They offer at their fuel centers (on same premises as their supermarkets) ten cents per gallon off of gasoline per $100.00 spent in their markets per month. Today the fuel regular price of 87 octane was $3.09 per gallon. We had .70 cents per gallon off and spent $2.39 per gallon. We try to fill up my car and my wife's at the same time and not shut off the pump or we lose the rest of the discount. Fry's allows up to 35 gallons at the discounted price per fillup.
Dec 28, 2012 4:54PM
i said a few months back don't think for one second that the dropping gas prices around election time wasn't planned . and just wait and you would see those greedy bastards make up for that few cents off a gallon many many times over . the truth is the ( ALGP)  said the price of gas could be sold at the pump for a dollar and thirty three cents a gallon and big oil could still make billions in profits !! GREED ! thats it . we have no one who can reel these greedy bastards in . they will charge what they want when they want and they ain't one damn thing we can do about it if we want to drive . they do have us over a barrel .
Dec 28, 2012 4:43PM
Of course they will. They will need to recover losses from stocks, and what bettter way than a rigged market. Christmas sales down, wait for the unemployment figures for Jan. and yet oil will rise. Built in relief for stock market losses for the chosen ones..........
Dec 28, 2012 4:25PM
Are this people crazy, ignorants, or paid by the gas companies? Prices at the pump have been dropping for months? Where!? Not in California! Fiscal cliff? another big fat lie of the 20 million they have said for the last 6 years! This year we had over production of  2 million barrels of oil. The barrel of oil is at $86.00 dollars. That's how it used to be when we used to pay $1.50 dollars per gallon. Anybody cares about this?
Dec 28, 2012 4:11PM
Why do these article steer belief of nonsense. Gas prices are determined by futures of large consumptions like the airlines. Lower demand and stockpiles drive the price. Watch when airline tickets drop significantly , it means they need to burn fuel for gas purchased in advance.
Dec 28, 2012 4:09PM
There going to do what they want when they want, we are just hear for the ride.
Dec 28, 2012 4:08PM
When I don't drive, I get a citation for the "road apples" left behind. Just can't go wrong with a good horse, big dog, or a strong cash cow! Suck on that FOXY AZ. Blond. If you're so "FOXY" show us a picture!
Dec 28, 2012 4:06PM
I get 9 gallons to the mile...what's it to you?
Dec 28, 2012 3:57PM
I don't believe in supply vs demand theory. It's about market manipulation and speculations. All a rip off schemes.
Dec 28, 2012 3:49PM

The answer is simple, get a car that gets good gas mileage.Why do people keep buying

cars and trucks that get horrible gas mileage.Every 18 months gas jumps.It`s called

GREED.Don`t people ever learn?

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