Good Question: Will We Ever Play Less Than $3 Per Gallon Again?
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MINNEAPOLIS (WCCO) – According to AAA, the average cost of gas has been more than $3 per gallon for 1,000 days straight.
It’s the longest streak ever for gas prices at this level. Right now, the average in Minnesota is $3.50 per gallon, slightly lower than the national average of $3.54 per gallon.
Bob Darbelnet, president and CEO of AAA, says kiss the days of cheaper gas prices goodbye.
“Paying less than $3 per gallon for gasoline may be automotive history for most Americans, like using 8-track tapes or going to a drive-in movie,” Darbelnet said. “The reality is that expensive gas is here to stay, which is tough on millions of people who need a car to live their lives.”
Experts say paying less than $3 is a thing of the past because of supply and demand. According to Patrick DeHaan, a senior petroleum analyst with GasBuddy.com, more people in the world want oil, and there are fewer places producing it.
“I think a lot of that is been due to the rapid increase in the Chinese economy here in the last five or 10 years,” DeHaan said.
He says demand is down in the U.S. from its peak in the summer of 2007, but is up exponentially in emerging economies, like China and Brazil.
“We are demanding a lot more oil that we were 20 years ago, 10 years ago, and supply has not grown at the same pace,” he said.
Through the 1990s, gas was just over $1 per gallon. In 2004, it hit $2. After Hurricane Katrina in Aug. 2005, it bounced up to $3 per gallon, but went back down. In 2008, prices went up to $4, but fell when the economy crashed.
DeHaan says it’s hard to predict where prices go from here, but believes if demand continues to outpace supply, prices will rise.
“We have a lot of things going on, the Chinese economy continues to improve,” he said. “Meanwhile, in our country, we’re putting more fuel efficient vehicles on the road, so it’s very hard to tell.”