Six months ago, the Lowell's Corporate Office of Fearless Predictions forecast that "Gasoline will be well above $3 a gallon by June, if not sooner." As part of the prediction, we also said oil prices would reach $80 a barrel.
Well, we were wrong.
As of this writing, most stations in Lexington have gasoline at $2.65, and oil has been around $71 a barrel.
At the time of our forecast, gas was about $1.49 a gallon, and oil stood at $39 a barrel. We predicted that a number of forces (weaker dollar, production cutbacks, greater demand, and speculation) would come together to drive oil prices upward. We were generally right about the forces driving prices up, but we were wrong about their strength and timing.
In particular, it appears that the economic rebound and infrastructure build-out we foresaw to drive greater demand really didn't kick in as soon or as strongly as we expected. We're slowly starting to see some signs of the rebound, but it didn't happen when we said it would.
We still expect $3-a-gallon gas by the end of the summer, and wouldn't be surprised to see $3.50 to $4 a gallon by the end of 2009.
That's what we see in our crystal ball. What do you think? Where will gas and oil prices go from here?