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?
One thought on “We Were Wrong”
Actually, I don’t think you are wrong yet. The price of oil tends to bubble a bit and then settle in for a week and then bubble again. I would not be at all surprised to see oil hit $80 by the end of the month which would push gas over $3.00 especially as summer travel gets in gear. The world production of oil has peaked and demand is continuing to grow, the low prices we are experiencing now are a result of the market crash, which was an external influence on the price but does not change the actual demand/supply equation (much) in the long run.