Let The Gouging Begin? Gas Prices May Have Finally Peaked

When people think of price gouging, they tend to think of people raising prices opportunistically. In fact, the most common type of gouging happens when gas prices stay artificially high after a spike. Still, we suppose the beginning of gouging season is better than nothing. But is it really here?

New numbers released overnight by AAA Fuel Gauge Report indicate that the nationwide average retail gas price declined $0.02 to $3.927. Some analysts are responding with guarded optimism.

“Gasoline prices in the hardest-hit areas have finally shown signs of relief with prices falling now in Chicago as they have for a few weeks in California,” said Patrick DeHaan, senior petroleum analyst for GasBuddy.com told the LA Times. “We may see an earlier peak than we have in prior years.”

We’ve been following the Energy Information Administration’s numbers, which showed $3.996 as the average national retail price for the week ending April 2. Hopefully, the next report will concur with AAA — and that the initial dip is the beginning of a longer, downward trend.

Gasoline prices may have finally peaked for now [LA Times]

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  1. Phil Keeps It Real [Consumerist] says:

    Highly doubt that, they will spike again around late May & for all of June & July. Gastradamus has spoken.

    Hi Phil!
    Sent from my Windows Mobile phone 6.0

  2. RandomHookup says:

    But have they peeked or piqued?

  3. AustinTXProgrammer says:

    Grumble… I don’t mind expensive gas as long as oil is high. I come out ahead. Now when oil falls back down and I’m still paying a lot for gas… I don’t come out ahead.

  4. consumed says:

    We will see the truth when the big oil giants quietly release their quarterly earnings reports. #profit

  5. BobOki says:

    I had read we peaked over 10 years ago. the prices we are currently paying are on oil futures, and last I looked oil futures were priced out over 20 years in the future. Why are we paying the price now for what gas will be 20 years from now?
    Ban futures trading plz thnx.

    • Bsamm09 says:

      Really? What exchange are those traded on? Latest I saw was 12/20/12 and the barrell price you always see is for the May 12th quote.

      http://finance.yahoo.com/q/fc?s=CLK12.NYM+Futures+Chain

    • Akuma Matata says:

      “Ban futures trading plz thnx.”

      We tried that already with onions (http://money.cnn.com/2008/06/27/news/economy/The_onion_conundrum_Birger.fortune/) and the market for onions is far more unstable now than it was before. Even onion farmers, the ones pushing for the ban, realize what a mistake that was. Futures trading is a valid and necessary function of the market.

      • MrEvil says:

        I think Onions are a bit different than what many people are mulling. You can’t buy Futures on Onions at all. Rather many are mulling regulation who can and can’t buy commodity contracts.

        Essentially, Speculators are false consumers. They buy contracts for commodities they have no intention of even taking delivery on, let alone using. False consumers = false demand which drives up prices even though real demand hasn’t changed.

        Futures are essential to modern industry. Company’s can better predict their operating expenses buying commodities in advance at a set price (Southwest Airlines in particular has used this to their advantage with Jet fuel contracts). Producers

        • Akuma Matata says:

          I understand that, but BobOki was calling for the banning of the futures trade, which would be disastrous.

    • billin says:

      I know it seems bizarre, but futures traders are a necessary part of the market, even though they usually have no interest in taking delivery of the commodities they’re trading. Basically, they act like insurance for people who actually do want to buy and take delivery of commodities.

      For example, if you’re a big commercial baker, your livelihood depends on the price of wheat. If the price of wheat goes way up, you’re in big trouble because now the costs of making bread go correspondingly way up. You can protect yourself, though, by buying futures on wheat. If the price of wheat goes up, your business takes a hit, but now that’s offset by the profit you’ll make on your wheat futures. Your business is now more stable and not at the mercy of wild swings in wheat prices.

      Additionally, if you didn’t have futures traders, the baker would have a much harder time finding someone to buy futures from, because only those producing and consuming wheat would be trading wheat futures. As the baker, you might not be able to find anyone willing to sell you futures when you need them to offset your risk.

      So, in short, it’s not as simple as “ban all futures trading”, though that seems like the obvious solution from the outside.

  6. yellowdog says:

    In the meantime, I dusted off the bike this morning and rode 10 miles to work in 40-degree temperatures (should be 70 on the ride home). Been a long time since I did this, though – left my water bottle on the kitchen counter, and my… bottom has been complaining.

  7. mauispiderweb says:

    I feel sorry for people in Hawaii … $4.89 for regular on Maui.

  8. TheMansfieldMauler says:

    Don’t worry, just follow Obama’s gas-saving recommendations:

    1. Get a tune up
    2. Keep your tires aired up
    3. Buy a hybrid.

    Easy peazy!

    • nbs2 says:

      Is Dick Durbin’s near blaming non-hybrid owners for the tornados close enough to the WBC nutters or did he fall short?

      • Captain Spock says:

        Durbin, IIRC said the other day to “Buy a Hybrid or Die”

        Some paraphrasing may have occured.

    • clippy2.0 says:

      are you saying it isn’t wise to keep your car properly tuned and keep an eye on your tire pressure?

      It’s kinda like the folks who drive 20+minutes around town to find the cheapest gas. Pro-tip, there is an easier way to save on gas expenses!

      • TheMansfieldMauler says:

        You might want to go back and look at some articles or youtube videos of Obama addressing high gas prices over the past couple of years.

        • clippy2.0 says:

          i’ve seen them. he has as much direct impact on the cost of gas as the rest of us. so again I ask, what is wrong with those suggestions? are you saying that people should drive on 15 psi tires and never change their spark plugs or oil?

          in case you missed the point of his message, it was that folks should claim some responsibility in managing their own expenses (specifically gas expenses)

        • LanMan04 says:

          Who cares what Obama has to say about gas prices. He saw ZERO control over them.

          Do you think he’s able to raise the price of a globally-traded commodity? How? Telepathy?

        • alexwade says:

          It is a good idea to keep a car well-maintained to save gas. This is not one thing you can rightfully slam President Obama about. President Obama has little control over gas prices, just like President Bush did.

          I don’t like the “Bush is evil” or “Obama is evil” rhetoric. It accomplishes nothing.

          • Ryno23 says:

            I think the slight ridicule was due to his talking about a VERY micro solution to quite a macro issue.

    • jayphat says:

      As much as I don’t like Obama, you have no idea the amount of savings in fuel economy there is in tires set to the proper pressure (hint: its not on the tire sidewall), an oil change, and a new air filter.

    • FLConsumer says:

      Most hybrids don’t break even for nearly 8 years. Instead, look at a diesel. Not only do they get great mileage, they can also be fast & fun to drive AND are better for the environment.

    • ARP says:

      Troll if obvious but….

      1) Keeping tires properly inflated can save you up to $432 according to studies (this was assuming $3 gas, so its probably higher). A little over 200 employees at Edmunds did this and saved over 5000 gallons of gas and approx $20k. Estimates are that if all Americans did this we’d be saving billions of gallons. I remember when they where handing out tire gauges as a joke a few years ago (and I’m sure you remember the purple heart band-aids, that was hilarious).

      2) Engine tune ups can save another 1-5% in gas mileage. Again, that translates to a few hundred dollars a year and larger macroeconomic impacts.

      3) At current gas prices, ROI for a hybrid is anywhere from 3-8 years, depending on how much you drive. Toyota is guaranteeing its batteries to the 100k mile mark, with tests showing they get to around 150k before they start to degrade appreciably. This is much more than the thoroughly debunked story about environmental costs of a hummer (assumes a driving life of approx 375k miles) v. Prius (assumes a battery life of 75k miles).

      So, your troll actually ends up having a good amount of truth to it.

  9. nbs2 says:

    First and foremost, I love you, Meg. I can imagine a multitude of ways certain other writers I’ve seen around the internet could have botched this article.

    On topic, I thought we already knew that there was gouging going on. Wasn’t there another article a bit back about gas prices and their relationship to the price of oil? I remember my takeaway from that was that we were already seeing a new baseline that prices were being built on – that gas should have been around $3.40 (based on the old standard) when it was at $3.90. I fully expect to see $3.90 or $3.95 as a baseline average price of gas – no matter how far the price of oil falls we won’t see prices drop more than pennies beyond that ($4 would be too scary for folks).

    As for personal anecdotes turning into statistically significant data, we saw the price of gas rise by a penny over the weekend. It is now $3.969 for regular. That was on top of a general rise that has seen gas rise from $3.85 about a few weeks ago. Right now, the only two things keeping us from Costco are: a) the discount we get at on food when we buy gas at the affiliate station, b) the discount we get on gas when we buy food at the affiliiated megamart, c) the 5% we get back on our PenFed Visa (with same statement credit instead of waiting until the end of the year).

  10. Jfielder says:

    Living in a “Speedway state” this type of gouging is totally the norm around here. If you haven’t heard of it, google “the speedway effect”. Douchbags…

    • gman863 says:

      Although it seems the major players in Houston (Shell, Valero) try to pull this at times, the amount of competition does seem to keep prices lower.

      In Houston, the three major grocery chains (Kroger, H-E-B, Randall’s/Safeway) sell gas at almost all of their stores. Even ignoring the .03 additional discount for using a Kroger or Randall’s shopper’s card, the grocery stores are almost always the cheapest. In guessing the logic is that, if you stop for gas, it’s not much of a stretch to assume you’ll drive an extra 100 feet, park and buy groceries. What’s strange is that Murphy USA (Walmart) doesn’t play along; their prices always seem to be a few cents higher than the Big Three.

      The best gas prices are when quickie marts on the same corner get into a pissing contest. Twice in the past year, I’ve seen gas drop up to .30 lower than the market average for a day or two when war breaks out between the Citgo and Chevron near my house.

      • catastrophegirl chooses not to fly says:

        when the murphy station nearest me opened it had prices 10 cents lower than everywhere around. which gradually crept up to keep pace with the other local stations. now they are usually the same or a penny higher than the one across the street. presumably they just wanted to create a mindset of ‘it’s cheaper at murphy USA’
        not entirely unlike walmart shelf prices have been known to do

    • f1rst 1 says:

      So that’s how they can offer their “Speedy Rewards” and give us free food, drink and gas discounts when they rule the roost on deciding gas prices in “Speedway” states. Time to never go there anymore. Thanks for shedding the light.

  11. gman863 says:

    I suspect gas prices over the next 7 months will be tied as much to politics as to the market price of crude oil.

    If polls show any chance in hell that Romney is closing in on Obama, Obama can release part of the country’s strategic oil reserves, putting a huge dent in the price of crude oil

    At that point, wait for the gas price wars to start in three…two…one…

    • majortom1981 says:

      the reason why gas prices are the way they are is because of refineries. Not because of oil prices.

      Its because of the nimby people. Nobody wants a refinery built by them so their are only a few in the US. There are not enough to deal with the whole US so one little thing happens and a refinery is put of line and bam huge gas price increases.

      Most people don’t know this but thats the real reason for the high gas prices. especially in states that require things like ethanol in the gas. There are even less refineries that do the ethanol in the gas.

      • Nikephoros says:

        Keep in mind it isn’t the ‘not-in-my-backyard-crowd’ who are preventing new refineries. The oil industry itself has no desire to build more. If they really wanted more refineries it would be child’s play for an industry with that much government pull (and cash reserves to buy more if needed) to find places to open more refineries in. But they don’t, because they have no reason to from a purely profit perspective.

        • gman863 says:

          You have a point. In the Pasadena/Texas City area of Houston, it’s doubtful anyone would notice if another refinery or two popped up on top of the dozen or so already in the area.

          If you’ve seen one refinery blow up, you’ve seen them all (/s).

  12. Captain Spock says:

    Gas around Chicago has been dropping steadily for about 2 weeks now… so i think it already peaked.

    • Ryno23 says:

      Two weeks? chicagogasprices.com says that the Chicagoland average was $4.394 today as opposed to $4.517 last week, which is what I’m basically recalling.

  13. Tim says:

    I Newt Gingrich gets elected, gas will be $2.50 a gallon. How can the president make gas $2.50 a gallon? Who knows! Vote Newt.

    • Applekid ‚îÄ‚îÄ‚î¨ Ôªø„Éé( „Çú-„Çú„Éé) says:

      He will condense the hot air coming out of his mouth into liquid fuels

  14. redskull says:

    Here’s the pattern I’ve noticed lately.

    • Gas is $3.75 per gallon. Pricey, but people are coping.
    • In one day, gas rises to a ridiculous $4.10 per gallon. People freak out.
    • After a week or so gas goes down to $3.95. Higher than it used to be, but less than the ridiculous price. People are relieved.

    • Repeat at regular intervals.

    • pythonspam says:

      It’s also why gas prices increase faster than they decrease. We as consumers don’t seem to get in a frenzy about prices if they are going down at a snail’s pace because it seems like we are better than where we were at the spike in most recent history. Perceived value is apparently more important than actual value. Its because of this that when wholesale gas prices/futures are falling that the retailers actually make their profits.

  15. Kestris says:

    Meanwhile, gas prices have been steadily rising here in SWVa for the last week.

    • dolemite says:

      Lol, I live in the same area, and posted the same thing below you. I’m convinced there is collusion going on in this area. There is no reason for gas to be at the national average, and to stay inflated for weeks after prices drop.

  16. dolemite says:

    I know for a fact the gas stations in my area gouge. Why? Every surrounding county/area has gas at .10 to .15 cheaper currently, no matter which direction you travel. Before gas became a roller coaster, our area was always 20 cents below the national average. Now? It’s currently about 2 cents lower. Also, prices stay inflated for weeks after the national average has dropped several times.

  17. majortom1981 says:

    the reason why gas prices are the way they are is because of refineries. Not because of oil prices.

    Its because of the nimby people. Nobody wants a refinery built by them so their are only a few in the US. There are not enough to deal with the whole US so one little thing happens and a refinery is put of line and bam huge gas price increases.

    Most people don’t know this but thats the real reason for the high gas prices. especially in states that require things like ethanol in the gas. There are even less refineries that do the ethanol in the gas.

    • HomerSimpson says:

      Um, then would you care to explain the refineries on the east coast that CLOSED because they weren’t profitable enough?

    • Coffee says:

      Hate to disagree, but my understanding is that the two largers drivers of our high gas prices are investors betting on oil futures based on perceived future value and being wrong (http://money.howstuffworks.com/oil-speculation-raise-gas-price.htm), and developing countries creating higher demand for the limited supply of oil.

      • Awesome McAwesomeness says:

        From what I have read, this would be correct. Speculators drive prices up along with increasing demand from a quickly dwindling supply.

        I have heard about refineries closing as well, so I doubt that is the real problem. Sounds like a red herring of some kind so that someone can be blamed politically.

    • Thorzdad says:

      During the latest surge in gas prices, there was actually surplus capacity at US refineries, largely because there was also a surplus in non-government gasoline stocks.

  18. catastrophegirl chooses not to fly says:

    i found this last night when i was clearing out some old paper – it was trip receipt from when i moved in 2004. really brings the sticker shock home
    http://www.flickr.com/photos/catastrophegirl/6915513500/

    • Anne Noise says:

      When I moved to Colorado from San Francisco in 2003, my family’s mind was collectively blown by gas prices under a dollar. That didn’t last long, obvs.

    • Applekid ‚îÄ‚îÄ‚î¨ Ôªø„Éé( „Çú-„Çú„Éé) says:

      I remember complaining when I started driving that I was paying $1.259 versus the $0.999 I saw my parent’s pay when I was too young to care what it cost.

    • icerabbit says:

      Yeah, over a decade ago it was below a $1. Little did we know that would be the end of an era … filling up a car for $12-15. $25 if it had a really big tank.

      Now it is $100 (premium) when the empty light comes on, with still a few gallons in the tank. OUCH !

    • DemosCat says:

      Per the receipt, you purchased 17.965 gallons. How much does that cost? (Not adjusted for inflation.)

      1972: $0.359/gallon: $6.45
      1982: $1.299/gallon: $23.34 (What a difference 10 years made.)
      1992: $1.129/gallon: $20.28
      2002: $1.039/gallon: $18.67
      2012: $3.899/gallon: $70.05 (Another big surge.)

  19. lovemypets00 - You'll need to forgive me, my social filter has cracked. says:

    I’ve been coping by using my Sheetz card, 3 cents off every day, along with Discover’s 5% cash back on gas from January through March, but that’s over now. Our local grocery store teams with Sheetz and you get 10 gas points for every $50 in groceries, so I save them up during the quarter and cash them in all at once. If I’m lucky (or unlucky) enough to need a new prescription during the quarter, the grocery’s pharmacy gives 100 gas points for 1 prescription per quarter.

    Last quarter I paid 97 cents per gallon, on up to 20 gallons. I took a gas can with me!

  20. Press1forDialTone says:

    We MUST defeat the federal, state and local RepubliThugs(tm pending)
    and STOP all energy speculation and speculators. It is as simple as that.

    • Awesome McAwesomeness says:

      Speculation shouldn’t be allowed to exist, period.

      • Bsamm09 says:

        All these speculators always driving the price up, why can’t there be people betting that the price will go down?

        Also, if you’re so certain that the price is always going up, why don’t you buy some futures contracts and make some bank? It must be very easy to trade and get rich on oil futures.

    • CentralScrutinizer says:

      No, it isn’t.

      The primary reason for expensive oil isn’t Republicans too friendly with big oil companies, or treehugging Democrats. The primary reason is that the human race burns roughly 80 million bbl/day, but nature produces roughly 0 million bbl/day, and the easy-to-get oil has long since been exploited. Therefore, the incremental barrel is likely to be a hard-to-get (and therefore, more expensive to obtain and refine) barrel such as tar sands, deep water oil, heavy oil, or sour (high sulfur) oil.

      For crude oil to fall significantly below $80/bbl, demand has to fall to the point that the oil from the Canadian tar sands is no longer needed. The extraction costs are roughly $80/bbl, so if oil falls below $80/bbl, extracting tar sand oil becomes a money-losing proposition, and the tar sand plants will close.

      That said, what’s going on appears to be a larger than usual spread between the costs of refined gasoline vs. crude oil. Part of that is due to EPA requirements for reformulated gasoline during warmer-weather months in areas with substandard air quality (such as the Chicago metro area.) During the warmer-weather months, gas is noticeably cheaper in Dekalb County (just outside the Chicago metro area) than in Kane County (far southwest suburbs including Aurora).

      While no doubt there’s some profiteering going on, everyone had better get used to ~$3/gallon as the bare minimum that oil will fall to. Figure roughly $2/gallon for the crude, roughly $0.50 for taxes, a quarter or so for refining and transportation costs, and a dime or so for the service station, and you’re basically there.

  21. Jay911 says:

    The cheapest price in Canada is currently the equivalent of US$4.58/US gal. Most expensive is $5.91. Expected to peak later this year at $6.05 (so no it hasn’t peaked yet).

    Makes that $3.89 I paid when on vacation in Tampa last week pretty appealing.

    It’d be nice if you’d buy some oil from us too instead of calling it dirty and evil – bring the price down a bit more by reducing shipping costs.

    • drjayphd says:

      As per my comment upthread, the people blindly bashing imported oil, assuming we’re getting most of our imports from the Middle East, rather than America’s toque… they’re idiots.

  22. FLConsumer says:

    Gas prices declined? Not in these parts.

  23. Sarek says:

    Maybe in other cities the price is dropping. Not in my hometown.

    You know how it works: the price skyrockets overnight: “It’s because the commodities price of oil rose! Or it’s because of Mideast tensions!”

    But it drops ever so slowly: “Hey, the tankers have to sail to the US. Then the oil has to be refined. Then it has to be trucked here. These things take time, be patient!”