Have Gas Prices Peaked?
Local economist explains indicators that gas prices may be peaking.
This BP at the intersection of I-55 and Route 6 has historically been among the highest, if not the highest gas prices in three counties.
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With prices soaring over $4.00 a gallon, drivers hope prices have reached their max. According to a local economist, there is evidence to suggest they may have.
"I wouldn't want to say with a threat of losing my life that they have," said Bill Johnson, an agriculture economist at Joliet Junior College. "I'd say there is better than a 60 percent chance that they have peaked or are close to peaking."
Johnson cites two examples pointing to what he believes are indicators of a peak.
First, he said that the relationship between the price of gas and the price of oil are inflated. In 2008, we had similar gas prices to what we have today. However, the price of oil was $148 a barrel then. Whereas today's oil prices are about $110 a barrel.
A second indicator is that we are seeing signs that people are using less gas. Johnson explained that when this starts to happen, it is usually a sign that prices are at or near peak.
What would threaten this is an unforeseen development that would cause price increases. For example, a disruption in the Middle East could affect gas prices, he said.
"Whenever something happens someplace that produces oil, it has an impact for everybody," Johnson explained.
Even if the U.S. does not buy oil from Libya, for example, a disruption there would affect gas prices here, he said.
"It would be nice to hear some news that things are calming down over there," he said.
All of this comes at a time when local farmers are rained out of the fields. Their inability to get crops planted has created a waiting game. Although gas prices are more closely tied to the price of oil than corn and ethanol are, there is a connection.
In next Friday's Ag News, learn how the continued storms will affect the average consumer.
How high do you expect gas prices to go?
Tell us in the comments.
forget me
8:49 am on Friday, April 29, 2011
I feel any traumatic event is an excuse to raise the gas prices. I am sure there is some kind of conspiracy behind these methods of altering gas prices. I would like to know why when I am pumping gas at Jewel, the pump clicks slower & it seems to be giving more gas than Caseys. Caseys pumps click so fast it makes may head spin & I seem to get less. Wonder if Lisa Madigan would look into this? If everyone would just not buy gas for a day, what do you think would happen? Just a thought!
Jacki McHale
12:56 pm on Friday, April 29, 2011
Haha. I agree with Nancy on the fact that every time there is a traumatic event they raise gas prices. Oh hell I just paid an arm and a leg for coffee at Jewel. Normally $7.99 now $10.99!? Guess I better enjoy every drop. Same goes for gas. I spend it much more wisely. No more random trips to go bummin' or just enjoy the drive. I stay home with the kids as much as I can. With one out of Channahon trip a week if at all! At the rate gas is, it will be a LONG summer of bike trails, and back yard fun! Now if only Channahon had a town center to hang out in...
carlos j aulet
1:30 pm on Friday, April 29, 2011
I'm not very impressed with the prediction of this "Agricultiral Economist," or as I see him the "Lone Ranger." Where does he do his research (honestly, no disrespect intended). All reports I have seen has indicated that there is no real shortage. That the raising gas prices are a result of perceived anticipated shortages (that is a shortages that hasn't happen yet. By the people who control this market. My question is what if the shortage never comes. And if it does, is it fair to raise the prices in anticipation? Why aren't people angry about this?
You know it's like Social Security, no one question what did the politicians spend (or mis-spend) this money on?
I may be over simplifying this but wasn't social security meant to SECURE OUR RETIREMENT? And they say we are leaving this debt to our children? You're right about this and this isn't fair to our children as they struggle to make their pun way for their own children. Wasn't this a simple concept; I make a contribution, the government puts in a share and we live happily ever after. They they talk about that there is no money but they don't say what they did with the money and did the tax payees approve of the use of this money. Republicans, Democracts, do you realley think there is a difference between the two? Maybe, but not by much.
carlos j aulet
1:42 pm on Friday, April 29, 2011
Addendum: Don't Economist make predictions based on their research? Yes people are purchasing less gas........ Now. What is the Economist's prediction for the summer, when many people customarily travel. I'm familiar with the basic economic concept of supply and demand (I'm not an Economist). What is this Economist prediction of demand for gas for this summer. Come on man! Tell me something I don't know. Give me some useful information (honestly no disrespect intended. I'm just a frustrated citizen).
carlos j aulet
1:46 pm on Friday, April 29, 2011
Please excuse may grammar and spelling typos. My frustration got the best of me.
forget me
3:40 pm on Friday, April 29, 2011
Hey Carlos I can feel your frustration. Do you remember back in the 70's when there was supposedly a gas shortage? You had to gas up before Sunday because gas stations were closed on Sunday. I don't believe that supply & demand crap. Listen all the hurricanes, tornados, earthquakes & people killing their own people, isn't the population decreasing? The demand should be less. We amercians do not know where to begin to do anything to get anything done. I'm not talking about rioting, maybe gas tea parties? I think if enough people banded together, something could be done. So until then I feel like my hands are tied behind my back. If anyone has any good ideas i may be on board!
carlos j aulet
4:07 pm on Friday, April 29, 2011
Nice to hear from you Nancy. Yes I do remember the 1970 gas shortage (or alleged shortage) I was a young man then. I was so worried yet I had a friend who wasn't concerned. Apparently he had some connect. The theory of supply & demand can apply Nancy. I believe in this case the powers at be don't wait for this theory to apply. In other words they don't wait for an actual shortage and an actual spike in demand. If I understood correctly the people who control this anticipate a shortage and in turn anticipate a higher demand therefore they raise the prices based up on a crisis that doesn't exit. Check out the most current profits made by the oil companies. I have an idea, if these wars are sanctioned by NATO or the Global community then why don't they charge the offending country in oil. Oh my, maybe not. Then this would serve as evidence and reveal that these wars are really about oil.
I'm with you Nancy. And then there were two!
Any takers? Let's start an on-line complaint to the White House. Any takers?
forget me
10:12 pm on Friday, April 29, 2011
I'm with ya on that! How would we get it started? Will the secret service be at my door? LOL
Bob Arnold
11:32 pm on Friday, April 29, 2011
Greed doesnt have an ending point. It just keeps on going like the stars in the sky... I dont think you can stop it just by writing to the Whit House. Where do they get a lot of their money??? Oil is bigggg business and is most inpossible to stop.
Bob
Bob
6:50 am on Saturday, April 30, 2011
I agree with Bob, as long as there is greed it will always be high, our only solution is to limit our purchases, the same goes with sporting events if we refuse to pay there inflated prices maybe a family outing will be affordable again.