Gas Prices: Prepare For Pain, $5.20 A Gallon By Labor Day?

By George Parrott

George Parrott

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3,050 views May 26, 2011

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Gas pump

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Get out your checkbook, have a backup credit card account, and consider missing a lunch or two each week, as gas prices are likely to soar to record levels this summer.

Of course, drivers in  Europe pay much more for their fuel than we do, but they have been sensible enough to opt for smaller cars and to use the mass transit that is far more readily available than it is here in the U.S.

Money magazine recently reported that fuel costs total around $4,300 per year for the average U.S. household already--and that was at $3.71 per gallon.

GasBuddy.com tracks fuel prices, and over the last six years, its data show a very clear pattern of annual price dips in the winter and peaks in the late summer.

Given that current gas prices still hover around $4.00 a gallon, and crude oil hasn't dipped much below $100 per barrel, the six-year pattern suggests that by the end of the summer, we could pay up to 30 percent more per gallon of gasoline than we do today.

Small cars as share of overall U.S. industry vs. gas prices, 2000-2009, Ford Motor Co.

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So based on the past patterns of summer fuel prices, we might see gas prices as high as $5.20 by Labor Day in some states.

Extending the projection of annual fuel cost from $3.71-per-gallon gas, by September, we could easily see fuel costing the typical American household as much as $ 465 per month at its height.

These past patterns only minimally reflect Mideast supply uncertainty. For the coming months, the political issues boiling in that part of the world don't seem likely to make crude oil any cheaper.

Small cars--minicars, subcompacts, and compacts--and plug-in electric and clean-diesel cars may look better and better over the coming months.

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