Phil Flynn is writer of The Energy Report, a daily market commentary discussing oil, the Middle East, American government, economics, and their effects on the world's energies markets, as well as other commodity markets. Contact Mr. Flynn at (888) 264-5665
Gas prices in Metro Detroit are expected to peak this year between $3.95 and $4.25 a gallon, according to a forecast released Tuesday.
But a separate government study released Tuesday predicted gas prices nationwide will decline this year and next, potentially ending an era of rising fuel prices.
In its annual outlook, website GasBuddy.com estimated prices will rise from now until a peak in April and then drop until they reach a low in December. Prices roughly followed this timeline in 2011 and 2012, except for unexpected events such as hurricanes and burst pipelines.
“The saying goes that all you can be sure of in life is death and taxes,” said Patrick DeHaan, GasBuddy.com senior petroleum analyst. “I’d add the seasonal run-up in gas prices every spring as something I’m sure of in life.”
Metro Detroit’s peak prices will range around the $4-a-gallon mark, although the median price for the nation is not expected to exceed $3.95, according to the report.
But the Energy Information Administration said in its short-term outlook that the average annual price of U.S. fuel would fall to $3.44 a gallon in 2013 and $3.34 a gallon in 2014 after averaging $3.63 a gallon last year.
It expects gas prices to mirror a projected drop in oil prices as domestic oil production improves.
It did not give a prediction for Detroit gas prices.
GasBuddy.com expects fuel prices to be especially volatile during three periods — April to May, when refineries begin producing cleaner, more expensive summer gas; August to September, when hurricane season arrives; and October to November as winter weather begins.
“Even with increasing energy production in the U.S., declining fuel consumption, and improving fuel efficiency, Americans may still face rising gasoline prices in 2013 … and that appears to be closely tied to the nation’s $16 trillion debt,” said Gregg Laskoski, a GasBuddy.com senior petroleum analyst.
He is referring to the nation’s weak-dollar policy, which causes oil and gas prices to rise.
Phil Flynn, an analyst with the PRICE Futures Group in Chicago, said such predictions are always difficult to make. “There are so many factors that can hit you out of the blue that can impact predictions,” he said. “If you have a storm or a war, you can throw it all out the window.”
The projection that Metro Detroit gas could go as high as $4.25 a gallon would threaten to match or surpass the record price for the region.
The Detroit area hit a high of $4.23 a gallon in May 2011, according to AAA. The record for Michigan is $4.26.
“A good year for many of us will simply mean the absence of new record high gasoline prices,” Laskoski said.
Last year, the price of gas in the Detroit area and Michigan peaked at $4.08 to $4.09 a gallon in late March.
The price spiked above $4 a gallon in late August and early September after Hurricane Isaac caused the closure of refineries along the Gulf Coast.
The U.S. Energy Information Administration said Tuesday that gas prices should fall during the next few years as the natural gas revolution — sparked by the controversial fracking process — gains steam and increases the supply of fuel.
“The era of high gas prices is probably getting very close to the end,” Flynn said. “For the first time ever we’re seeing we have a viable alternative to gasoline and diesel, and that’s natural gas.”
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