As we mentioned yesterday, fuel prices have tumbled in recent months, but never fear: they're already on the way back up. According to a poll conducted by the Consumer Federation of America, a consumer advocacy group, most Americans think that gas prices will keep on climbing for the next several years.
Data from CFA's survey (PDF) shows that "consumers expect the national gasoline price average to rise by almost 50 percent in the next two years...and by over 80 percent in the next five years." In practical terms, that means that Americans believe the average price for a gallon of unleaded will climb to $3.20 by 2017 and $3.90 by 2020.
The good news there is that consumers seem to have their wits about them. They clearly understand that today's low, low pump prices are just a fortunate aberration and that things will soon return to normal.
The bad news is that consumers may not be as pessimistic about fuel prices as they ought to be. Today, February 20, Americans are paying an average of $2.28 for a gallon of regular unleaded. Last month, the same gallon of gas cost $2.05. That's an 11 percent gain in just one month -- well below the rate of increase anticipated by consumers.
GAS IS VOLATILE
Luckily, fuel prices rarely move in straight lines. They fluctuate up and down in response to a wide array of factors. Some of those factors, like the price of oil, seem sensible. If the price of oil goes up, for example, it's logical that the price of gas would climb, too.
Other factors are, well, less sensible, like the mercurial attitudes of traders, who seem to value and devalue gasoline based on the quality of their morning mochafrappucinolatttes. The price spikes that accompany the transition from "summer blend" to "winter blend" gasoline and back again fit in this category, too. Thought the change in refining techniques understandably causes a change in the price of gas, the real reason for the semi-annual price spike is the artificial shortage created by oil companies who want to sell down their supplies of the outgoing fuel before ramping up production of the new stuff. (There's a slightly longer explanation of that complicated process here.)
And let's not forget about the unusual factors that pop up now and then to affect fuel prices -- like in 2012 when Iran threatened to shut down the Strait of Hormuz and bring oil shipping to a halt.
FUEL ECONOMY REMAINS #1 CONSIDERATION
Although consumers' personal views on the future of gas prices may be a bit rosy for our tastes, the CFA survey thankfully shows that auto shoppers are keeping good fuel economy at the top of their must-have lists (as they've done for several years). As the organization notes, that may be because many of them got burned in the recent past:
"In January 2009, the monthly average price of gas was $1.84. Five years later – the typical term of a new car loan– the monthly average gas price rose to $3.36. In January 2009, consumers who were lulled into purchasing lower mileage vehicles due to low gas prices ended up spending thousands more than the fuel-efficient buyers during the time they owned the vehicle. For example, buying a 15 mpg vehicle in January 2009 would have resulted in a monthly gas expenditure of $153 for that January. Five years later, that monthly average expenditure would skyrocket to $268. During the first five years of ownership; these buyers would spend over $6,400 more on gas than if they had purchased a 25 mpg vehicle."
Food for thought, no?
How do you feel about the future of fuel? Is fuel economy your top criteria when shopping for a new car? Share your thoughts in the comments below.